GROwTH in MOTiOn - Far East Orchard€¦ · in MOTiOn AnnuAl RePORT 2014. Contents 2 Corporate Profile • 4 Letter to Shareholders • 10 Corporate ... Company adopted its new name

GROwTH in MOTiOn AnnuAl RePORT 2014

Contents2 Corporate Profile • 4 Letter to Shareholders • 10 Corporate Information • 11 5-Year Financial Highlights • 12 Properties of the Group • 16 Board of Directors & Management • 22 Business Structure • 26 Corporate Governance • 41 Financial Report • Statistics of Shareholdings • Notice of Annual General Meeting • Proxy Form

Like water ripples

that expand outwards, Far East Orchard started from

a solid foundation to forge ahead. Since our transformation in 2012,

we continue to expand beyond and advance strategically. Riding on this

same momentum, we are set to generate ripples that grow into waves – bigger, stronger and

more distinctive.

Corporate Profile

Far East Orchard Limited (Far East Orchard) is a member of Far East Organization, Singapore’s largest private property developer. Incorporated as Ming Court Limited in 1967, the Company came under Far East Organization in 1987 and was renamed Orchard Parade Holdings Limited in 1991. In July 2012, as part of a corporate restructuring, the Company adopted its new name of Far East Orchard Limited to better reflect its close alignment with its substantial shareholder and to leverage the “Far East” brand. Far East Orchard is listed on the Mainboard of the Singapore Exchange since 1968.

An established developer, Far East Orchard delivered a number of successful residential, commercial and hospitality developments. It is currently developing euHabitat, a first-of-its-kind integrated residential development located in the eastern part of Singapore. Another residential development, RiverTrees Residences in Fernvale Close in Singapore, is a joint venture with Frasers Centrepoint Limited and Sekisui House, Ltd (Sekisui). For commercial development projects in Singapore, SBF Center is a joint development project with Far East Organization (FEO) and Woods Square, with FEO and Sekisui. Far East Orchard has also successfully developed quality residences such as

The Floridian, The Nexus, Glendale Park, Regent Grove, Seasons View, Kew Green, Kew Residencia and The Manor Houses.

The Company has also expanded beyond Singapore into the region with its first joint venture property development project, Harbourfront Balmain, in Sydney, Australia, with Australia’s Toga Group. It is also redeveloping its commercial building in Kuala Lumpur, Malaysia into a hospitality property.

Redefining itself through a strategic transformation of the business in 2012, Far East Orchard has expanded into new complementary business

Notes:1 Through its wholly owned subsidiary, Toga Hospitality Investments Pty Limited.2 Through its wholly owned subsidiary, Sword Private Limited.3 Both acquisitions were completed through TFE Hotels.4 Acquired 50% interests in a portfolio of property companies which own the four hotel properties. Remaining 50% interest is owned by Toga Group.

Jul 2012Renamed as Far East Orchard Limited from Orchard Parade Holdings Limited

Aug 2013Entered into hospitality joint venture with Toga Group1

Nov 2013Entered into hospitality joint venture with The Straits Trading Company Limited2

Aug 2012Commenced new businesses in hospitality management and healthcare real estate

Novena Specialist Center, Singapore

Rend

ezvo

us H

otel

Perth Scarborough, Australia

Adin

a Ap

artm

ent H

otel Bondi Beach, Sydney, Australia

AMoY, Singapore

2 Far East Orchard Limited Annual Report 2014

lines in hospitality management and healthcare real estate segments.

Through its joint ventures with The Straits Trading Company and Toga Group completed in 2013, the Company’s hospitality arm - Far East Hospitality - extended its reach beyond Singapore and Malaysia, into Australia, China, Denmark, Germany, Hungary and New Zealand. In 2014, it acquired four new hotels in Europe under the Adina brand and two office buildings in Australia for hotel conversion. The Company’s hospitality portfolio now covers more than 80 properties with over 13,000 rooms. In Singapore, it operates the city-state’s largest

hospitality portfolio comprising 18 hotels and serviced residences. The Company’s stable of nine unique and complementary hospitality brands are Adina Apartment Hotels, Medina Service Apartments, Marque, Oasia, Quincy, Rendezvous Hotels, Travelodge Hotels, Vibe Hotels and Village Hotels and Residences.

Far East Orchard also owns a portfolio of medical suites in Singapore’s premier medical hub of Novena. These purpose-built medical suites in Novena Medical Center and Novena Specialist Center are conceptualised to set the benchmark for a new generation of healthcare buildings with five star

quality finishes, advanced technology and modern infrastructure for medical specialists. The Company is also co-developing the SBF Center with Far East Organization, which will be a 31-storey commercial building located in the Central Business District that offers a broad spectrum of office and medical spaces set in park-like greenery. Far East Orchard intends to be the premier private owner, operator and landlord of healthcare space in Singapore.

Today, Far East Orchard has a diversified portfolio focusing on property development, hospitality real estate development and management and healthcare real estate.

Adina Apartment Hotel, Norwest, Sydney, A

ustr

alia

JuN 2014Acquired a commercial office property for conversion into a hotel in Sydney CBD, Australia3

Aug 2014Acquired 50% interest in four hotel properties in Denmark and Germany4

oCt 2014Subscribed for 50% interest in a joint venture property development project in Sydney, Australia

Jul 2014Acquired a heritage-listed building for conversion into a hotel in Brisbane CBD, Australia3

Adin

a Apa

rtment Hotel Berlin Checkpoint Charlie, germany

Harbourfront Balmain, Sydney, Australia

Rend

ezvo

us H

otel

Perth Scarborough, Australia

3

Australian residential market – a mixed-use

residential and commercial harbourfront

development in Balmain, a western suburb

of Sydney known for its colourful and

artistic surroundings and is home to some

of Australia’s best-known writers, actors,

film directors and musicians.

Initiated in October 2014, the project

known as Harbourfront Balmain,

represented many firsts: the first of such

property development for Far East Orchard

outside of Singapore and Malaysia and

another first with our joint venture partner,

Toga Group (Toga), on the residential

development front. Harbourfront Balmain

marks a turning point for our property

development business as we seek to grow

this division regionally.

The Company is positive about the

long-term prospects of our core market,

Singapore. Despite the uncertainties in the

global economy and the impact of local

cooling measures, our private residential

project RiverTrees Residences at Fernvale

Close, Sengkang was well-received by

the public, with over 60% of its 496 units

sold since its launch in February 2014.

This development is a proud partnership

with Frasers Centrepoint Limited (FCL)

and Sekisui House, Ltd (Sekisui).

Beyond the private housing market, we

won a landmark tender in April 2014,

jointly with Far East Organization and

Sekisui, for a commercial project to

build two 16-storey office towers with

strata office units for sale and lease at

Dear Shareholders,

2014 was a ground-breaking year

for Far East Orchard. We successfully

consolidated our business and secured

new avenues for growth. We also

followed through our international

aspirations and started initiatives in

Australia and Europe.

These expansions were supported by

healthy revenue growth from our various

business divisions, against a backdrop of

property cooling measures in Singapore,

continued uncertainty in the global

economy and increased competition

from our peers.

The Management team was steadfast

in delivering strong financial results and

had the opportunity to capitalise on the

strategic benefits of our partnership with

the Toga Group.

It is our privilege to inform you, our

shareholders, that in addition to its four

residential and commercial projects

under development in Singapore, as well

as a hospitality property undergoing

redevelopment in Malaysia, Far East

Orchard had also successfully commenced

our first residential development project

in Sydney, Australia. Our hospitality

management arm, Far East Hospitality,

today has a global foot print with

ownership of 14 hospitality assets and

managing more than 13,000 rooms across

eight countries.

Creating Iconic Places We marked our first foray into the

letter to Shareholders

Woodlands Square. The project, well

located within Woodlands, will also

have retail space for lease. Being the

first site predominantly for office use

in Woodlands1, this project is expected

to serve as the catalyst to kick-start the

development of the Woodlands Regional

Centre since the decentralised regional

centres were first conceptualised in 1991.

Our hospitality division marked a year of

steady expansion. With a good business

foundation and brand reputation that

we have garnered from our partnership

with Toga, we now have several robust

growth platforms that will enhance our

transformation into a respected, leading

regional brand with strong recognition

for its umbrella of quality hotels, serviced

residences and apartment hotels.

We made an entry into Europe in August

with our first asset acquisition of four quality

hotel properties in Germany and Denmark

with Toga – Adina Apartment Hotel Berlin

Checkpoint Charlie, Adina Apartment Hotel

Frankfurt Neue Oper, Adina Apartment

Hotel Berlin Hauptbahnhof and Adina

Apartment Hotel Copenhagen. The

transaction marked our foray into Europe

that is set to remain as the world’s largest

tourism region. In 2014, Europe reached

a new peak of 2.7 billion tourism nights,

up by 1.7% compared with 2013.2 There

has been a steady increase in the number

of nights spent in tourist accommodation

establishments in Europe over the last

five years following the decline observed

in 2009 arising from the financial crisis.

Notes:1 Far East-Sekisui JV tops bids for Woodlands office site, Business Times, April 9, 2014. 2 New record level of 2.7bn tourism nights in the EU28 in 2014, Eurostat, January 29, 2015. 3 What to expect for Singapore private property prices in 2015, Straits Times, Jan 2, 2015.


Our newly acquired hotels are currently

operating under an umbrella brand of

‘Adina Apartment Hotels’ by Toga Far

East Hotels (TFE Hotels), the joint venture

between Far East Hospitality Holdings (our

subsidiary) and Toga since 2013. Adina

Apartment Hotels is TFE Hotels’ global

apartment hotel brand, offering apartment

space with hotel service.

The purchase of the European hotels

came hot on the heels of the joint venture

TFE Hotels’ acquisitions of two office

buildings in Australia for hotel conversion

in 2014 – (i) a 13-level office property

(280 George Street) in the Sydney central

business district in June 2014; and (ii) a

heritage-listed building in Brisbane’s CBD

(171 George Street) in July 2014. TFE

Hotels continues to actively pursue growth

opportunities across Australia through

both the hospitality management and

ownership businesses.

Maintaining Financial StrengthFar East Orchard achieved a net profit

attributable to equity shareholders of

S$35.5 million for the financial year ended

31 December 2014 (FY2014).

We recorded a robust financial

performance for FY2014, generating a

profit before tax of S$48.8 million, which

more than doubled our FY2013 profit

before tax of S$21.0 million. This strong

performance was mainly led by the same

growth seen in our total revenue, which

was S$315.5 million in FY2014, compared

to S$158.6 million in FY2013.

The key drivers of our FY2014 revenue

growth were from the hospitality

division, higher recognition of revenue

from the euHabitat project, as well as

more medical suites sold in FY2014.

In particular, revenue in our hospitality

division increased by S$115.9 million to

S$212.0 million for FY2014, mainly due

to the first full year financial contribution

from the hospitality transactions with The

Straits Trading Company Limited (STC) on

1 November 2013.

At Far East Orchard, we continue to maintain

financial prudence in managing our

business. This may include the divestment

of properties, as and when appropriate, to

recycle capital for re-deployment towards

higher yielding growth opportunities. Our

debt-equity ratio is still at a healthy level

of 0.09, while our level of borrowings

had increased slightly by S$16.3 million

to S$105.7 million this year, mainly due

to additional funding for the Group’s

investments in the hospitality division. The

net assets backing per share in FY2014 was

S$2.95 similar to the previous year.

We are pleased to announce that the Board

of Directors have recommended a first and

final dividend of six cents per share in view

of our FY2014 financial results.

our Portfolio of PropertiesIt was a quiet 2014 for the Singapore real

estate market, following the implementation

of policy restrictions such as stricter lending

criteria and higher taxes to prevent a

property bubble. The Urban Redevelopment

Authority’s property price index had indicated

a 4% decline in property prices in 2014,

which reflected the moderated private

residential property transaction levels and

price corrections seen.3

Notwithstanding, our property development

division stayed resilient and saw a 75%

growth in sales revenue this year, from S$54.1

million in FY2013 to S$94.4 million in FY2014.

euHabitat, an integrated residential

development comprising suites, SOHO

apartments, condominiums and townhouses,

recorded S$75.5 million in revenue and

S$22.2 million in operating profit.

RiverTrees Residences, our private residential

development with FCL and Sekisui, sold 200

out of 300 units launched during its first

weekend of sale, demonstrating that there

is still demand for high-quality homes at the

right prices. We expect the development to

continue attracting buyers and benefit from

the growing interest in Sengkang, following

the opening in November of the nearby new

lifestyle location, Seletar Mall, last year.

For SBF Center, our mixed-use commercial

development in the centre of Singapore’s

Adina Apartment Hotel Berlin Hackescher Mark

t, ger

man

y

Novena Medical Center, Singapore

“Looking beyond Singapore, we will also

work with our partners to explore synergies to bring our expertise to suitable overseas opportunities and establish

ourselves as a quality partner in the

region.”

5

financial district, about 80% of the 249 units

has been sold. We expect our 20% share of

SBF Center’s contribution to be recognised

only on completion in 2017.

The contribution from our new

development projects of Woods Square

in Singapore and Harbourfront Balmain in

Sydney, Australia, will be recognised upon

completion of the project.

Our property investment division reported

revenue of S$9.2 million and operating

profit of S$6.1 million, which mainly

includes rental income from our medical

suites in Novena Specialist Center and

Novena Medical Centre. As the Novena

precinct in Singapore continues to grow

as the leading medical hub for Singapore,

we believe our portfolio of medical suites

in this area puts us in a good position to

benefit from the growth of Singapore’s

healthcare industry.

growing Beyond SingaporeWe are upbeat about our overseas portfolio

particularly in the Australian residential and

hospitality markets as these are back in

favour among foreign buyers and investors

due to better returns on investments.4

Our latest property development project,

Harbourfront Balmain with Toga in Sydney,

allows us to leverage on our expertise

and financial strength together with our

partner’s local expertise and take a step

towards expanding our development

capabilities in Australia and the region.

Together with Toga, we will progressively

seek and identify suitable sites for property

development and maintain prudence in

our evaluations.

Equally notable is our investment in the

Australian hospitality market, where we had

leveraged on the expertise of TFE Hotels

in Australia and Far East Hospitality in Asia

and successfully integrated a major piece

of our Australian hospitality investment in

the Rendezvous hotel portfolio, which we

acquired from STC in 2013.

With the completion of the integration of

the Rendezvous hotel portfolio in 2014,

we had started drawing synergies across

all platforms. We expect to register a

favourable occupancy rate in 2015 as

Australia continues to be one of the top

travel destinations for tourists. For the

year ended September 2014, there were

6.8 million visitor arrivals, an increase of

8.2% compared to the previous year.5

On our venture in European hospitality

assets, we are pleased to note that we are

seeing positive contributions from the four

Adina hotels in Europe acquired in August

2014. As one of the largest hospitality

management groups in Singapore and

Australia, Far East Hospitality, together with

TFE Hotels, expect to bring our industry

expertise to expand the hotel ownership

and hospitality management in Europe.

Closer to home, in Singapore, Far

East Hospitality had kept up with its

momentum from 2013, where they had

secured and commenced a new hospitality

management contract on Rendezvous

Hotel Singapore and the launch of two

new hotels – Village Hotel Katong and

Amoy. Rendezvous Hotel Singapore

completed its refurbishment in 2014 and

repositioned itself to showcase more

artistic and cultural elements associated

with its local surrounding, which has

received positive feedback from guests

and customers at the hotel and its retail

podium. Village Hotel Katong opened

its doors in early November 2013 with

a mission to deliver a taste of Singapore

culture, a reflection of the flagship

property of the Village brand. The Amoy

boutique heritage hotel, whose entrance

is a temple-turned-museum located in

the heart of Singapore’s CBD, offers an

attractive proposition to foreign travellers

and corporate guests who prefer a

heritage stay.

With these strategic partnerships, our

Hospitality arm now owns 14 hospitality

properties and operates a combined

portfolio of more than 13,000 rooms

under its management. Our footprint

extends across 80 hotels and services

residences in eight countries – Australia,

China, Denmark, Germany, Hungary,

Malaysia, New Zealand and Singapore,

with more in the development pipeline. We

look forward to aligning these properties

across the different operating platforms

to achieve their expected synergies,

which will ultimately boost returns to our

shareholders and our brand profile.

As Far East Orchard embarks on further

growth plans, we will seek to secure

diversified funding sources from both

financial institutions and capital markets,

which include the recent establishment

of our S$1 billion multicurrency medium

term note programme.

the Year AheadIn Singapore, we expect that various

headwinds will keep a lid on home-buying

demand, hence prices of private residential

property properties are expected to remain

on a path of moderation in 2015. These

include the continued enforcement of

cooling measures amid the tightened credit

environment, a mounting supply of new

homes, a weak leasing market and the

impending rise in interest rates.6

We will continue to participate selectively

in government land tenders that fit our

investment strategy for our property

development business. Looking beyond

Singapore, we will continue to work

Notes:4 Asia Pacific Emerging Trends in Real Estate 2014, PricewaterhouseCoopers. 5 Australia Tourist Arrival September 2014, http://www.tourism.australia.com/statistics/arrivals.aspx6 What to expect for Singapore private property prices in 2015, Straits Times, Jan 2, 20157 Asia Pacific Property Digest 4Q 2014, JLL, February 10, 2015.

Revenue

S$315.5

Increase from FY2013

99%million


village Hotel Katong, Singapore

with our partners to explore synergies to

bring our expertise to suitable overseas

opportunities and establish ourselves as a

quality partner in the region.

In Singapore, with more than 1,700

new rooms in 2014 and over 3,800 new

rooms expected in 20157, we envisage

the operating environment for the

hospitality division to remain challenging

in the near term.

The longer term outlook for the

tourism sector however remains positive

as Singapore continues to strengthen

its position as the regional hub for

business and as a leisure destination. The

enhancement of the tourism landscape

and infrastructure, such as the opening

of the Singapore Sports Hub and various

new attractions is also expected to further

improve Singapore’s attractiveness for

both business and leisure travellers.

Looking ahead, while our operating

environment remains challenging, we

remain committed to strengthening our

foundation by consolidating our existing

asset portfolio for long term growth. We

will also continue to identify appropriate

avenues of growth overseas to further

develop our position as a leading industry

player in the wider region.

We will continue to invest in our people,

products and services and brand to ensure

we can continue to deliver even better results

for all stakeholders – our shareholders,

business associates, employees, customers

and the wider community.

Lastly, we would like to thank our

shareholders, business partners, the

management team, our employees and

our fellow directors for their commitment

and support. We look forward to your

continued support as we continue our

journey in further enhancing our core

business and delivering strong and

sustainable returns for the long term.

We want to express our gratitude to

our shareholders for your steadfast

support in our journey of transformation

and growth.

Moving forward, we are confident in our

ability to identify and grasp opportunities

while navigating the challenges, and we

remain committed to our promise to

deliver returns to you, our shareholders.

Thank you.

Koh Boon HweeChairman

lui Chong CheeGroup Chief Executive Officer and Managing Director

In Appreciation

by Chairman“Our Board would like to express our

gratitude to Lucas Chow, who was our Group

Chief Executive Officer and Managing Director from March

2012 to September 2014. His courageous spirit and charisma as

one of our leaders during our transformational period was highly

commendable. We wish him all the very best in his future endeavours.

To lead the Group to the next level, we welcome Lui Chong Chee who

officially came onboard on September 1, 2014. He brings along extensive

experience in managing some of Singapore’s blue chip companies, notably

Raffles Medical Group, Capitaland Financial and Capitaland Residential.

With the retirement of Tan Siok Hwee from the Board, the Board and

Management team would like to express our thanks for her many years

of contribution and guidance. At the same time, the Board would

also like to express our appreciation to Arthur Kiong for his

unwavering commitment as he retires from the Board,

but will continue to lead our hospitality

division forward.”

7

Advancing growthActively, we expand our portfolio,

looking beyond the region to enlarge

our geographical presence.

Harbourfront Balmain, Sydney, Australia

Adina Apartment Hotel Melbourne Flinders Street, Austra

lia

village Hote

l Cha

ngi,

Sing

apor

e

Total number of properties owned

and managed:

94

Corporate InformationBoARD oF DIRECtoRS

Non-Executive ChairmanMr Koh Boon Hwee

group Chief Executive officer and Managing DirectorMr Lui Chong Chee

Executive DirectorMr Kiong Kim Hock Arthur

Non-Executive DirectorsMdm Ng Siok KeowMdm Tan Siok Hwee

Independent DirectorsMr Heng Chiang Meng (Lead Independent Director)Mr Cheng Hong KokMs Chua Kheng Yeng, JennieMdm Ee Choo Lin Diana

CoMPANY SECREtARIES

Ms Chwee Chong Foon Ms Madelyn Kwang Yeit Lam

AuDIt & RISK CoMMIttEE

ChairmanMr Cheng Hong Kok

MembersMr Heng Chiang MengMs Chua Kheng Yeng, JennieMdm Ee Choo Lin Diana

NoMINAtINg CoMMIttEE

ChairmanMr Heng Chiang Meng

MembersMr Koh Boon HweeMs Chua Kheng Yeng, Jennie

REMuNERAtIoN CoMMIttEE

ChairmanMr Heng Chiang Meng

MembersMr Cheng Hong KokMdm Ee Choo Lin Diana

REgIStERED oFFICE

1 Tanglin Road #05-01Orchard Parade HotelSingapore 247905t (65) 6833 6688F (65) 6738 8085W www.fareastorchard.com.sg

SHARE REgIStRAR

Boardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623t (65) 6536 5355F (65) 6536 1360

INDEPENDENt AuDItoR

PricewaterhouseCoopers LLP,8 Cross Street, #17-00 PWC BuildingSingapore 048424

Partner-in-charge Mr Tan Boon Chok(Appointed since the financial year ended 31 December 2012)

MAIN BANKERS

Oversea-Chinese Banking Corporation LimitedDBS Bank Ltd

vibe Savoy Hotel Melbourne, Australia

AMoY, Singapor

e

travelodge Docklands Melbourne, Australia


Notes:1 The Group early adopted some new and amended FRS. These standards were applied retrospectively and therefore the 2012 consolidated statement of comprehensive income and the 2011

and 2012 balance sheets had been restated as disclosed in the financial statements. Consequently, the affected ratios have been restated accordingly.2 Basic earnings per share are calculated by reference to the weighted average number of shares in issue during the year.3 Dividend in specie of 0.22086 Yeo Hiap Seng Limited (YHS) share per share is calculated using the market price of YHS shares on the date of payment.4 Figures have been rounded.

group Revenue by Business Segment

2014$’000

2013$’000

2012$’000

2011$’000

2010$’000

Hospitality 212,001 96,072 55,044 51,066 48,823

Property Development 94,380 54,146 74,866 229,834 135,822

Property Investment 9,156 8,351 10,399 11,373 11,118

other - - - - 460

Revenue 315,537 158,569 140,309 292,273 196,223

Profit before income tax 48,758 21,049 194,944 147,804 95,633

Profit attributable to shareholders 35,498 29,385 190,755 124,791 82,531

Shareholders' equity 1,169,416 1,142,758 1,100,050 1,085,139 964,128

total assets 1,874,698 1,930,839 1,685,295 1,655,333 1,446,563

Net assets per share ($) 2.95 2.96 2.92 2.99 2.73

Basic earnings per share (cents)4 9.0 7.6 51.5 34.8 23.5

Final dividend per share (cents) 6.0 6.0 6.0 3.0 2.0

Special dividend per share (cents) - - 12.0 6.0 4.0

Dividend in specie per share (cents) - - 87.0 - -

gearing ratio 0.09 0.08 0.06 0.42 0.42

5-Year FinancialHighlights

Property Development Hospitality Property Investment

2013

2014

2012

2011

2010

30%

3%

67%34%61%

5%

6%80%14%

79%

4%17%

6%25%69%

11

location Effective interest

tenure Site area (sm) No. of units/rooms

DeveLopmeNT properTieS

Residential projects under development(1)

SingaporeRiverTrees Residences Singapore 30% Leasehold 14,930 496 unitseuHabitat Singapore 20% Leasehold 41,261 750 unitsAustraliaHarbourfront Balmain Sydney 50% Freehold 12,375 121 units

Commercial projects under developmentSingaporeWoods Square Singapore 33% Leasehold 18,569 na(2)

SBF Center Singapore 20% Leasehold 2,932 249 units

Completed propertiesSingaporeMedical suites at Novena Medical Center Singapore 100% Leasehold - 7 unitsMedical suites at Novena Specialist Center Singapore 100% Leasehold - 32 units

iNveSTmeNT properTieS

AustraliaRetail podium at Rendezvous Hotel Perth Scarborough Perth 70% Freehold - 11 unitsSingaporeOffices at Tanglin Shopping Centre Singapore 100% Freehold - 4 unitsMedical suites at Novena Medical Center Singapore 100% Leasehold - 37 unitsMedical suites at Novena Specialist Center Singapore 100% Leasehold - 10 units

HoSpiTaLiTy

owned propertiesAustraliaRendezvous Hotel Perth Scarborough Perth 70% Freehold 11,467 336 roomsRendezvous Hotel Perth Central Perth 70% Freehold 1,973 103 roomsRendezvous Hotel Melbourne Melbourne 70% Freehold 1,999 340 roomsAdina Apartment Hotel Sydney Harbourside Sydney 30% Leasehold 3,058 113 roomsAdina Apartment Hotel Adelaide Treasury Adelaide 30% Leasehold 4,154 79 roomsAdina Apartment Hotel Brisbane(6) Brisbane 30% Freehold 2,693 159 roomsVibe Hotel Sydney Sydney 30% Freehold 1,164 191 roomsTravelodge Mirambeena Resort Darwin Darwin 30% Freehold 13,100 224 roomsRestaurant at Rendezvous Hotel Brisbane Anzac Square(7) Brisbane 70% Freehold - 1 unitManager unit at Rendezvous Hotel Brisbane Anzac Square(7) Brisbane 70% Freehold - 1 unitManager units at Rendezvous Reef Resort Port Douglas Port Douglas 70% Freehold - 2 unitsDenmarkAdina Apartment Hotel Copenhagen Copenhagen 35% Freehold 3,000 128 roomsgermanyAdina Apartment Hotel Berlin Checkpoint Charlie Berlin 35% Freehold 2,143 127 roomsAdina Apartment Hotel Berlin Hauptbahnhof Berlin 35% Freehold 1,798 139 roomsAdina Apartment Hotel Frankfurt Neue Oper Frankfurt 35% Freehold 1,455 134 rooms

As at 31 December 2014

Properties of the group


Notes:1 Per our announcement on 29 January 2015, our interest in 7 and 11 Bassein Road has been disposed to Transurban Properties Pte Ltd. Refer to Note 14(c) to the financial statements.2 Development planning in progress.3 Includes 1,069 sm of leasehold area.4 Redevelopment in progress from office building into 247-room hotel.5 Awaiting redevelopment from office building into apartment hotel.6 In February 2015, a sale and purchase agreement was entered into for the sale of this property. Completion of the sale will be subject to satisfaction of conditions precedent.7 To be rebranded under Adina Apartment Hotel from 1 April 2015.

location Effective interest

tenure Site area (sm) No. of units/rooms

HoSpiTaLiTy

leased and managedSingaporeOrchard Parade Hotel Singapore 100% Freehold/ Leasehold 8,143 388 rooms(3)

Village Hotel Albert Court Singapore 100% Leasehold 4,273 210 roomsVillage Residence Clarke Quay Singapore 100% Leasehold 6,238 127 rooms

Properties under redevelopmentAustralia280 George Street Sydney 30% Freehold 583 na(5)

171 George Street Brisbane 30% Freehold 1,485 na(5)

MalaysiaOasia Suites Kuala Lumpur Kuala Lumpur 100% Freehold 1,880 247 rooms(4)

Acquired during the year ended 31 December 2014

AustraliaDevelopment Properties

121 unitsInvestment Properties

11 unitsHospitality

1,545 rooms

MalaysiaHospitality

247 rooms

DenmarkHospitality

128 rooms

germanyHospitality

400 rooms

SingaporeDevelopment Properties

1,534 unitsInvestment Properties

51 unitsHospitality

725 rooms

13

Total gross sales from joint ventures:

billion

S$2.6Adina Apartment Hotel Copenhagen, D

enmark

Strengthening SynergyStrategically, we focus on our strengths, consolidating our operations, optimising resources and developing value-added partnerships.

Rivertrees Residences, Singapore

Adina Apartment Hotel Copenhagen, Denmark

oasia Hotel, Singapore

Adina Apartment Hotel Bondi Beach

, Syd

ney,

Aust

ralia

Rendezvous Hotel Sydney the Rocks,

Austra

lia

Mr Koh Boon Hwee, 64Non-Executive Chairman• Chairman, Board of Directors• Member, Nominating Committee

Mr Koh Boon Hwee was appointed as a Non-Executive Director

and Chairman of the Board on 1 January 2013. He was last

re-elected as a Director of the Company on 30 April 2013.

As Mr Koh serves on various executive committees in Far East

Organization, the Nominating Committee of the Company

considers Mr Koh to be non-independent.

He started his career in 1977 at Hewlett Packard and rose to

become its Managing Director in Singapore, a post he held from

1985 to 1990. From 1991 to 2000, he was Executive Chairman

of the Wuthelam Group, and from 2002 to 2009, Mr Koh was

at S i2i Limited (formerly known as MediaRing Ltd) where his

last held position was Executive Director. He was responsible for

overseeing the corporate strategy and management of these

companies. Mr Koh has concurrently been with Sunningdale Tech

Ltd (formerly known as Tech Group Asia Ltd) since 2003, where

he oversaw the operations of the company as Executive Chairman

and Chief Executive Officer from 2005 to 2008, as Non-Executive

Chairman from 2008 to 2014, and now as Executive Chairman

from 2015.

Mr Koh was also the Non-Executive Chairman of the Singapore

Telecom Group (SingTel) and its predecessor organisations from

1986 to 2001. From 2001 to 2005, Mr Koh served as Non-

Executive Chairman of Singapore Airlines Limited, and from 2005

to 2010 as Non-Executive Chairman of DBS Group Holdings Ltd

and DBS Bank Ltd.

From 1996 to 2010, Mr Koh served on the Board of Temasek

Holdings Pte Ltd, and was a member of the Executive Committee

from 1997 to 2010.

Board of Directors & Management

Mr Koh graduated from Imperial College with a Bachelor of

Science (Mechanical Engineering), First Class Honours, in 1972,

and obtained a Master in Business Administration with Distinction

from Harvard Business School in 1976.

present Directorships in other listed companies:Singapore• Sunningdale Tech Ltd (Chairman)

• Yeo Hiap Seng Limited (Chairman)

overseas• AAC Technologies Holdings Inc (Chairman)

(Cayman Islands, listed on the Hong Kong Stock Exchange)

• Agilent Technologies, Inc

(USA, listed on the New York Stock Exchange)

other principal commitments:Singapore• CM Houlder (SEA) Pte Ltd (Chairman)

• Credence Partners Pte Ltd (Chairman)

• FEO Hospitality Asset Management Pte. Ltd. (Chairman)

• FEO Hospitality Trust Management Pte. Ltd. (Chairman)

• Nanyang Technological University, Board of Trustees (Chairman)

• Rippledot Capital Advisers Pte Ltd (Chairman)

• GlobalORE Pte Ltd (Chairman)

• EDB International Advisory Council (Deputy Chairman)

• Academy of Engineering Singapore (Fellow)

• Harvard Singapore Foundation (Director)

• Rippledot Capital Management Pte Ltd (Director)

• The Research, Innovation and Enterprise Council (Member)

• The William and Flora Hewlett Foundation (Director)

• Fontaine Investment Pte Ltd (Director)

• Bank Pictet & Cie (Asia) Ltd (Director)

overseas• Credence Capital Fund II (Cayman) Ltd (Executive Director)

• First Spring Ltd (Director)

• Razer Inc (Director)

past Directorships in other listed companies (2012-2014): Nil


Mr lui Chong Chee, 54group Chief Executive officer and Managing Director

Mr Lui Chong Chee is appointed as Executive Director as well

as Group Chief Executive Officer & Managing Director of the

Company from 1 September 2014. At the Company’s 47th Annual

General Meeting, Mr Lui will retire and be eligible for re-election

pursuant to Article 101 of the Company’s Articles of Association.

Mr Lui has extensive financial and business leadership experience

from major listed companies. He served as Chief Financial Officer

of Raffles Medical Group Ltd, where he was responsible for the

financial management, business development and IT functions.

During his time with the CapitaLand Group, he held various senior

management positions, including Group Chief Financial Officer

of CapitaLand Limited; Chief Executive Officer of CapitaLand

Residential Limited; and Chief Executive Officer of CapitaLand

Financial Limited. He also held various posts as Director in various

listed companies with the CapitaLand Group, and was the

Chairman of Australand Holdings Limited, which was listed in the

Australian bourse. Prior to joining the CapitaLand Group, Mr Lui

was Managing Director and Senior Vice President, Capital Markets

Group of Citicorp Investment Bank (Singapore) Limited.

Mr Lui received a Bachelor of Science in 1985 in Business

Administration (magna cum laude) from New York University, USA,

as well as a Master of Business Administration in 1986 in Finance

and International Economics. In 2005, he attended the Advanced

Management Program at Harvard Business School.

present Directorships in other listed companies: Nil

other principal commitments:Singapore• Far East Hospitality Holdings Pte. Ltd. (Chairman)

• The Boys’ Brigade Share-a-Gift (Chairman)

• Rendezvous Hotels International Private Limited (Director)

overseas• Rendezvous Hotels (Australia) Pty Ltd (Director)

• Toga Hotel Holdings Pty Ltd (Director of Trustee Board)

past Directorships in other listed companies (2012-2014): • Australand Holdings Limited

Kiong Kim Hock Arthur, 54Executive Director

Mr Kiong Kim Hock Arthur was appointed Executive Director and

Chief Executive Officer of Hospitality Business of the Company

on 1 September 2012. He was last re-elected as a Director of

the Company on 30 April 2013. At the Company’s 47th Annual

General Meeting, Mr Kiong will retire by rotation pursuant to

Article 96 of the Company’s Articles of Association and he does

not wish to seek re-election so as to devote more time to the

hospitality business.

From 2008 to 2012, Mr Kiong was the Managing Director of Hotel

Operation (Asia Pacific & China) and Senior Vice President of Group

Marketing Services at Banyan Tree Hotels & Resorts. He was the

Director of Far East Hospitality Business Group from August 2005

to 2007. Mr Kiong was Vice-President of Marketing (Asia Pacific)

for the Peninsula Group based in Hong Kong from 2002 to 2005,

where he was responsible for the marketing functions in Head

Office and sales performance of the hotels outside the USA.

Mr Kiong has over 20 years of hotel industry experience having

held operations, sales and marketing roles for various hotels in Asia

and the USA including The Peninsula Hotels, The Mandarin Oriental

Hong Kong, The Ritz-Carlton, Hyatt International, Westin Hotels

and Banyan Tree Hotels & Resorts.


other principal commitments:Singapore• Far East Hospitality Holdings Pte. Ltd. (Director and CEO)

overseas• Toga Hotel Holdings Pty Ltd (Director of Trustee Board)


17

Mdm tan Siok Hwee, 64Non-Executive Director

Mdm Tan Siok Hwee was appointed as an Executive Director

of the Company on 6 August 1987 and she was re-designated

as a Non-Executive Director on 5 March 2014. Mdm Tan was

last re-elected as a Director of the Company on 30 April 2013.

She is an Executive Director of Far East Organization and also

serves as Director of various non-listed companies in the Far East

Organization Group. As she is directly associated with Far East

Organisation Pte Ltd, which is a substantial shareholder of the

Company, she is considered by the Nominating Committee of the

Company to be non-independent.

Mdm Tan will retire by rotation pursuant to Article 96 of the

Company’s Articles of Association at the Company’s 47th Annual

General Meeting. As she will relinquish her role in Far East

Organization in July 2015, she has decided not to seek re-election.

Mdm Tan obtained her Bachelor of Accountancy degree from

the University of Singapore in 1973 and is a Certified Public

Accountant. She has been a member of the Institute of Singapore

Chartered Accountants since 1976.


other principal commitments:• Far East Organization (Executive Director)

• Jia Holdings Pte Ltd (Director)


Mdm Ng Siok Keow, 68Non-Executive Director

Mdm Ng Siok Keow was appointed as an Executive Director

of the Company on 6 August 1987 and was re-designated as

a Non-Executive Director on 5 March 2014. She was last re-

elected as a Director of the Company on 24 April 2014. As she is

directly associated with Far East Organisation Pte Ltd, which is a

substantial shareholder of the Company, she is considered by the

Nominating Committee of the Company to be non-independent.

Mdm Ng is an Executive Director of Far East Organization and a

Director of various unlisted companies in the Far East Organization

Group. She also serves as a Director of Jurong Health Services Pte

Ltd, which is the holding company of the Ng Teng Fong General

Hospital in Singapore. She is a Patron of the Cairnhill Community

Club and Bukit Timah Community Club, and was the Chairman of

the Management Committee of Cairnhill Community Club from

June 1994 to June 2007. She was also a Director of Singapore

Symphonia Company Ltd. She was a Director of the Singapore

Dance Theatre from 1999 to 2003 and a Resource Panel

Member of the Government Parliamentary Committee (National

Development) from 2001 to 2002.

Mdm Ng was awarded the Pingat Bakti Masyarakat (PBM) in

1995, the Orchid Award by the Singapore Girl Guides Association

in 1996 and the Bintang Bakti Masyarakat (BBM) in 2001. In

2015, Mdm Ng was conferred the SG50 Outstanding Chinese

Business Pioneers Award by the Singapore Chinese Chamber of

Commerce & Industry in recognition of her exemplary contribution

to Singapore in the real estate arena and to the community.

Mdm Ng obtained her Bachelor of Science (Honours) degree in

Chemistry from the University of Singapore.

present Directorships in other listed companies:• Tung Lok Restaurants (2000) Ltd

other principal commitments:• Far East Organization (Executive Director)

• Jurong Health Services Pte Ltd (Director)



Mr Cheng Hong Kok, 72Independent Director• Chairman, Audit & Risk Committee• Member, Remuneration Committee

Mr Cheng Hong Kok was appointed Non-Executive Director of

the Company on 30 May 1996. He was last re-appointed as a

Director of the Company on 24 April 2014. Mr Cheng, being

over the age of 70 years, will be re-appointed as a Director of

the Company pursuant to Section 153(6) of the Companies Act

(Cap. 50) at the Company’s 47th Annual General Meeting. Mr

Cheng, who has served on the Board for more than 9 years, is

considered independent by the Nominating Committee because he

has continued to demonstrate strong independence in character

and judgment and has contributed effectively as an Independent

Director by providing impartial and autonomous views.

Mr Cheng is currently a Director of SP Corporation Limited,

a Singapore-listed company. He was also a Director of Gul

Technologies Singapore Ltd, from which he stepped down after

its successful voluntary delisting from the Singapore Exchange

in January 2013. Mr Cheng was a Director and an Executive

Committee member of Singapore Petroleum Company Limited

(SPC) from 1999 to 2009. Prior to that, he was the President and

Chief Executive Officer of SPC from 1981 to 1996. Through SPC,

he was involved in the Asean Council on Petroleum (ASCOPE)

for many years. He was also a Board member of the Singapore

Economic Development Board from 1987 to 1990 and was a

member of the Government Economic Planning Committee from

1989 to 1991.

Mr Cheng graduated from the University of London in 1964 with

First Class Honours degree in Chemical Engineering and attended

the Advanced Executive Management Program at the Kellogg

Graduate School of Management, Northwestern University, USA,

in 1981. In 1961, he was awarded the Singapore State Scholarship,

the Colonial Welfare and Development Scholarship and the

University of Malaya Entrance Scholarship. He was also awarded

the University of Cambridge Fellowship and the Eisenhower

Fellowship in 1964 and 1979 respectively.

present Directorships in other listed companies:• SP Corporation Limited

other principal commitments: Nil

past Directorships in other listed companies (2012-2014):• Gul Technologies Singapore Ltd

(delisted on 18 January 2013)

Mr Heng Chiang Meng, 69lead Independent Director• Chairman, Remuneration Committee• Chairman, Nominating Committee• Member, Audit & Risk Committee

Mr Heng Chiang Meng was appointed Non-Executive Director of

the Company on 19 June 1998. In 2008, Mr Heng was appointed

as Lead Independent Director of the Company. He was appointed

as the Chairman of the Remuneration Committee and Nominating

Committee on 9 March 2011 and 29 April 2011 respectively. He

was last re-elected as a Director of the Company on 30 April 2013.

Mr Heng, who has served on the Board for more than 9 years, is

considered independent by the Nominating Committee because he

has continued to demonstrate strong independence in character and

judgment and has contributed effectively as an Independent Director

by providing impartial and autonomous views.

In his corporate career spanning over 30 years, Mr Heng held senior

positions in several financial institutions including Citibank NA, the

Monetary Authority of Singapore and Overseas Union Bank Limited.

His other major area of experience is in real estate, having been the

Managing Director of First Capital Corporation Limited, the Executive

Director in the Far East Organization Group, and the Group Managing

Director of Lim Kah Ngam Limited.

He also served four terms as a Member of Parliament from 1984

to 2001 during which he chaired the Government Parliamentary

Committees for Communications and the Environment as well as the

Ang Mo Kio-Cheng San Community Development Council and the

Cheng San Town Council.

Mr Heng holds a Bachelor of Business Administration (Honours)

degree from the University of Singapore.

present Directorships in other listed companies:Singapore• Keppel Land Limited

• Macquarie International Infrastructure Fund Limited

overseas• Academies Australasia Group Limited

(listed on the Australian Stock Exchange in Sydney)

other principal commitments: Nil


19

Ms Chua Kheng Yeng, Jennie, 70Independent Director• Member, Audit & Risk Committee• Member, Nominating Committee

Ms Chua was appointed to the Board of the Company as an

Independent Director on 1 January 2014. On 1 April 2014, she

was appointed as a Member of the Audit & Risk Committee and a

Member of the Nominating Committee of the Company. She was

last re-elected as a Director of the Company on 24 April 2014.

Ms Chua, being over the age of 70 years, will be re-appointed

as a Director of the Company pursuant to Section 153(6) of the

Companies Act (Cap. 50) at the Company’s 47th Annual General

Meeting. The Nominating Committee considers Ms Chua to be an

Independent Director.

Ms Chua brings with her over 40 years of international experience

in the tourism and hospitality industry. Ms Chua is a Director

of two other entities listed on the Singapore Stock Exchange –

GuocoLeisure Limited and GuocoLand Limited. She is a Director

of ISS A/S, a company listed on NASDAQ OMX Copenhagen

stock exchange.

She is currently the Chairman of Alexandra Health Pte Ltd,

Alexandra Health System Pte Ltd, WoodlandsHealth Pte Ltd, Yishun

Community Hospital Pte Ltd, Geriatric Education & Research

Institute Limited and GLH Management Group Pte Ltd. She is also

the Deputy Chairman of Temasek Foundation CLG Limited.

She is Singapore’s Non-Resident Ambassador to the United

Mexican States.

She is a Director of MOH Holdings Pte Ltd and The Singapore

Chinese Girls’ School.

She is a Member of the Advisory Board of the Latin American

Chamber of Commerce-Singapore, a member of Singapore’s

Pro-Enterprise Panel and a member of MOH Holdings Healthcare

Infrastructure and Planning Committee.

She is a Justice of the Peace, a Director on CapitaLand’s Hope

Foundation and an Adviser to the Community Chest.

She was formerly President and CEO of Raffles Holdings Ltd,

Chairman of Raffles International Limited, President and CEO of

The Ascott Group Limited, a Director of Ascott Residence Trust

Management Limited, the Chief Corporate Officer of CapitaLand

Limited, Chairman of the Singapore International Chamber of

Commerce and Singapore’s Non-Resident Ambassador to The

Slovak Republic.

Awards and accolades which she had received include four

Singapore National Day Awards, including the Meritorious Service

Medal conferred in 2014, President’s Volunteerism & Philanthropy

Awards 2012 (President’s Special Recognition Award), the

Outstanding Contribution to Tourism Award 2006, Women’s

World Excellence Awards 2006, Travel Personality of the Year

Award 2005, NTUC Medal of Commendation 2005, Bloomberg

Business Week Magazine 25 Stars of Asia Award 2003, Asia

Pacific (Hotel) 2002 Person of the Year, National Productivity

Award 2002, Pacific Area Travel Writers Association Hall of Fame

2000, Hotelier of the Year 1999, Woman of the Year 1999,

Champion of the Arts 1999 and Independent Hotelier of the

World 1997.

Ms Chua graduated from Cornell University’s School of Hotel

Administration.

present Directorships in other listed companies:Singapore• GuocoLeisure Limited

• GuocoLand Limited

overseas• ISS A/S (NASDAQ OMX Copenhagen stock exchange)

other principal commitments:Singapore• Alexandra Health Pte Ltd (Chairman)

• Alexandra Health System Pte Ltd (Chairman)

• WoodlandsHealth Pte Ltd (Chairman)

• Yishun Community Hospital Pte Ltd (Chairman)

• Geriatric Education & Research Institute Limited (Chairman)

• GLH Management Group Pte Ltd (Chairman)

• Temasek Foundation CLG Limited (Deputy Chairman)

• MOH Holdings Pte Ltd (Director)

• The Singapore Chinese Girls’ School (Director)

• The RICE Company Limited (Director)

• Singapore Institute of Technology (Chairman, Advisory Committee)

overseas• ISS World Services A/S (headquartered in Denmark) (Director)

past Directorships in other listed companies (2012-2014):• Ascott Residence Trust Management Limited (Director)

• CapitaMalls Asia Limited (Director)


Mdm Ee Choo lin Diana, 57Independent Director• Member, Audit & Risk Committee• Member, Remuneration Committee

Mdm Ee was appointed to the Board of the Company as

an Independent Director and Member of the Audit & Risk

Committee on 29 April 2011. On 1 June 2011, she was appointed

as a Member of the Remuneration Committee of the Company.

She was last re-elected as a Director of the Company on 24 April

2014. The Nominating Committee considers Mdm Ee to be an

Independent Director.

Mdm Ee has over 25 years of international experience in the

tourism and hospitality industry. She held senior leadership

positions at Raffles International Limited managing multi-hotel

brands and gained broad experience in the areas of business

management, sales and marketing, operations, technical

services, quality assurance management, human resources and

organisational development. She was formerly President of Raffles

Hotels & Resorts where she held responsibilities for the group’s

growth strategy and for the operating and financial performance

of its hotels spanning South East Asia, China, the United States,

Middle East and Europe.

Mdm Ee obtained her Bachelor of Arts degree in Economics from

the National University of Singapore.


other principal commitments:Singapore• Mt Faber Leisure Group Pte Ltd (Chairman)

• SHATEC Institutes Pte Ltd (Director and Chairman,

Academic & Examinations Advisory Council)

• Hotel & Accommodation Industry Skills & Training Council,

Workforce Development Agency Singapore (Vice Chairman)

• BND Associates Pte Ltd (Director)

• Far East Hospitality Holdings Pte. Ltd. (Director)

• Republic Polytechnic Singapore (Member of Board of Governors

and School of Hospitality Advisory Committee)

• Singapore Tourism Board (Director)

overseas• Toga Hotel Holdings Pty Ltd (Director of Trustee Board)


Mr ling Ang Kerng, Kelvin, 53Chief Financial officer

Mr Ling Ang Kerng, Kelvin was appointed Chief Financial

Officer of the Company on 1 January 2014. He is responsible for

business ventures, strategic partnerships, and overall financial

matters of Far East Orchard and its group of companies.

Mr Ling was previously the Chief Operating Officer of the Retail

Business Group at Far East Organization (“FEO”). In other senior

roles, Mr Ling had spearheaded the implementation of shared

services including the consolidation of accounting functions

across FEO’s hospitality portfolio, identifying and implementing

business solutions to drive financial discipline and enhance the

assets’ financial performance. He also launched the restaurant

and franchised food arm of FEO, Kitchen Language, in 2008 to

bring new food concepts and brands to Singapore.

Prior to joining FEO, Mr Ling spent over 20 years in finance

and operations in professional and commercial business

environments including The Oriental Singapore, Pontiac Marina,

Coopers & Lybrand and various insurance companies. He

was also involved in incubating services for start-ups at PwC

Consultants Singapore.

Mr Ling is a member of the Institute of Singapore Chartered

Accountants, and a Fellow of the Association of Chartered

Certified Accountants.

21

Business Structure

Singapore

100%• Orchard Parade Hotel • Village Hotel Albert Court • Village Residence Clarke Quay

Australia and New Zealand

70%• Rendezvous Hotel Sydney The Rocks• Rendezvous Hotel Brisbane Anzac Square3,4

• Rendezvous Reef Resort Port Douglas3

• Rendezvous Hotel Adelaide • Rendezvous Hotel Brisbane on George• Rendezvous Hotel Sydney Central• Rendezvous Hotel Auckland• Rendezvous Hotel Christchurch

HospitalitySingapore

33%• FEO Hospitality Asset

Management Pte Ltd and FEO Hospitality Trust Management Pte Ltd

Investments

owNeD properTieS2

LeaSeD properTieS2

Australia

70%• Rendezvous Hotel Perth Scarborough• Rendezvous Hotel Perth Central• Rendezvous Hotel Melbourne • Restaurant and manager unit at Rendezvous Hotel Brisbane

Anzac Square2,4

• Manager units at Rendezvous Reef Resort Port Douglas2

30%• Adina Apartment Hotel Sydney Harbourside• Adina Apartment Hotel Adelaide Treasury• Adina Apartment Hotel Brisbane• Vibe Hotel Sydney• Travelodge Mirambeena Resort Darwin• 280 George Street Sydney• 171 George Street Brisbane

germany

35%• Adina Apartment Hotel Berlin Checkpoint Charlie • Adina Apartment Hotel Berlin Hauptbahnhof • Adina Apartment Hotel Frankfurt Neue Oper

Denmark

35%• Adina Apartment Hotel Copenhagen

Malaysia

100%• Oasia Suites Kuala Lumpur


Australia

50%• Harbourfront Balmain

Singapore

100%• Medical units at Novena

Medical Center and Novena Specialist Center

33%• Woods Square

30%• RiverTrees Residences

20%• SBF Center • euHabitat

Property

Notes:1 Percentages shown here are based on the Group’s effective interest. 2 Managed by Far East Hospitality or TFE Hotels.3 Rendezvous Hotels (Australia) Pty Ltd leases all units and owns the

2 units in each of these strata titled properties.4 To be rebranded under the Adina Apartment Hotel from 1 April 2014.

maNagemeNT aND oTHer

properTy DeveLopmeNT

Singapore and Malaysia

70%• Far East Hospitality

operates the brands oasia, Quincy, rendezvous Hotels and village Hotels and residences

Australia, New Zealand, germany, Hungary and Denmark

30%• TFE Hotels

operates the brands adina apartment Hotels, medina Serviced apartments, vibe Hotels and Travelodge Hotels

Singapore

100%• Offices at Tanglin

Shopping Centre • Medical units at Novena

Medical Center and Novena Specialist Center

Australia

70%• Retail podium at Rendezvous

Hotel Perth Scarborough

properTy iNveSTmeNT

23

Hotel Kurrajong, Canberra, Australia

vibe Canberra, Australia

Harbourfront

Balmai

n, S

ydne

y, A

ustr

alia

Adina Apartment Hotel Berlin Hackescher Markt, germany

Number of new hospitality

management agreements and properties:

14

Expanding opportunitiesReadily, we remain nimble to opportunities, constantly seeking to inspire new possibilities while maximising synergies.

Corporate governanceFar East Orchard Limited is committed to maintaining a high standard of corporate governance and to promote corporate transparency, accountability and integrity to enhance shareholders’ value.

This report describes the Group’s corporate governance practices and structures with reference to the principles and guidelines of the Code of Corporate Governance 2012 (the “Code”) as well as the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) and the Companies Act (Cap. 50) of Singapore (the “Act”), where applicable. The Group remains focused on the spirit and substance of the Code. It is constantly reviewing its current practices in line with the guidelines of the Code.

PRINCIPlE 1Board’s Conduct of its Affairs

The Board, as fiduciaries in the interests of the Company, is collectively responsible for the long-term success of the Group. It has the responsibility to oversee the effectiveness of Management, provide entrepreneurial leadership, review the Group’s corporate strategies and direction, and ensure that the necessary financial and human resources are in place for the Group to meet its objectives. The Company’s Management remains accountable to the Board.

The functions of the Board include reviewing and approving the annual budget of the Group, ensuring that there is a sound system of internal controls to safeguard shareholders’ investments and the Group’s assets, reviewing management accounts, reviewing the Management and business performance of the Group, approving the release of the quarterly and year-end results announcements, and endorsing the framework of remuneration for the Board and key executives.

The Board is made up of Directors who have the right core competencies and experience to enable the Board to contribute effectively.

Every Director is expected, in the course of carrying out his/her duties, to act in good faith, provide insights and consider at all times, the interests of the Group.

The Board has established three board committees (“Board Committees”) to assist in the execution of its responsibilities. They are the Audit & Risk Committee (“ARC”), the Remuneration Committee (“RC”) and the Nominating Committee (“NC”).

The Board meets at least four times a year at regular intervals and whenever particular circumstances require. Telephonic attendance and conference via audio communication at Board meetings are allowed under the Company’s Articles of Association. The Board and Board Committees may also make decisions by way of circulating resolutions.


The attendance of the Directors at scheduled meetings of the Board and Board Committees during the financial year ended 31 December 2014 is disclosed below:

Boardaudit & risk Committee

Nominating Committee

remuneration Committee

No. of meetings 5 4 1 2

Names of Directors

Koh Boon Hwee 5 - 1 -

Lucas Chow Wing Keung1 3 - - -

Lui Chong Chee2 2 - - -

Ng Siok Keow 5 - - -

Tan Siok Hwee 4 - - -

Kiong Kim Hock Arthur 5 - - -

Heng Chiang Meng 5 4 1 2

Cheng Hong Kok 5 4 - 2

Chua Kheng Yeng, Jennie3 4 3 - -

Ee Choo Lin Diana4 5 4 1 2

Notes:1 Mr Lucas Chow Wing Keung retired as the Group CEO and Managing Director on 1 September 2014.2 Mr Lui Chong Chee was appointed as the Group CEO and Managing Director on 1 September 2014. 3 Ms Chua Kheng Yeng, Jennie was appointed as a member of the ARC and the NC on 1 April 2014. 4 Mdm Ee Choo Lin Diana stepped down as a member of the NC with effect from 1 April 2014.

The Company recognises the contribution of the Directors beyond attendance at the meetings of the Board and Board Committees.

The Company has adopted internal guidelines regarding matters that require Board approval. The types of material transactions, which require Board approval, include: i) transactions in the ordinary course of business with gross value per transaction exceeding a specified amount;ii) major transactions not in the ordinary course of business;iii) borrowings and/or provision of corporate guarantees or other securities;iv) acquisition or disposal of fixed assets exceeding a specified value;v) equity or contractual joint ventures;vi) diversification into new businesses; andvii) interested person transactions.

Changes to regulations and accounting standards are monitored closely by Management. The Directors are briefed, during Board meetings or at specially convened sessions conducted by professionals, on regulatory changes that have any significant bearing on the Group’s or Directors’ obligations.

Newly appointed Directors are provided training on the roles and responsibilities of a Director of a public listed company. Each new Director is provided with a formal letter setting out the Director’s duties and obligations and is also briefed by Management on the business activities and strategic directions of the Group. Directors are briefed and provided with relevant information on the Group’s policies and procedures relating to corporate conduct and governance including disclosure of interests in securities, restricted periods for dealings in the Group’s securities and restrictions on disclosure of confidential or price sensitive information.

27

Corporate governanceThe Directors were provided opportunities to attend other appropriate courses, conferences and seminars, at the Company’s expense, which include programmes conducted by the Singapore Institute of Directors.

PRINCIPlE 2Board Composition and guidance

The Board currently consists of nine (9) Directors of whom four (4) are considered independent by the Board. There is a strong independence element on the Board, with Independent Directors constituting more than one-third of the Board.

Mr Heng Chiang Meng, Mr Cheng Hong Kok, Ms Chua Kheng Yeng, Jennie and Mdm Ee Choo Lin Diana are considered Independent Directors. The Independent Directors have provided declarations and confirmed that they do not have any relationship with the Company or its related companies and its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Directors’ independent business judgement in the best interests of the Company. The NC and the Board have deliberated their declarations and considered them independent.

The Board is of the view that Mr Heng Chiang Meng and Mr Cheng Hong Kok are considered independent, notwithstanding that they have been on the Board for more than nine (9) years, because they have continued to demonstrate strong independence in character and judgement. They have contributed effectively as Independent Directors by providing impartial and autonomous views. They are also subject to the same rigorous review and assessment as the other Independent Directors.

The Board is of the view that its present size is appropriate and facilitates effective decision-making, taking into account the scope and nature of the Group’s operations. The Board comprises respected members of the business community who have long and extensive experience in various fields, including engineering, hospitality, corporate management, accounting, banking and finance. A profile of each member of the Board is found in the “Board of Directors and Management” section of the Annual Report.

Board members engage in open and constructive debate and challenge Management on its assumptions and proposals which is fundamental to good corporate governance. The Board aids in the development of strategic proposals and oversees effective implementation by Management to achieve set objectives. The Board also monitors reporting of performance. The Non-Executive Directors are well supported by accurate, complete and timely information. Non-Executive Directors have unrestricted access to Management. Informal meetings are held for Management to brief Directors on prospective deals and potential developments at an early stage, before formal Board approval is sought. The Non-Executive Directors meet informally without the presence of Management. When Directors are unable to attend any Board or Board Committee meetings, they may provide their comments to the Chairman of the Board or the relevant Board Committees separately.

The Board has no dissenting view on the Letter to Shareholders from the Chairman and the Group CEO for the year in review.

PRINCIPlE 3Chairman and Chief Executive officer

The roles and responsibilities of the Chairman and the Group CEO are distinct and separate to maintain effective supervision and accountability. The Chairman and the Group CEO are not related family members.

The Chairman is responsible for ensuring the effectiveness of the Board and Board Committees as well as governance process. He promotes an open environment for debate, ensures sufficient allocation of time for thorough discussion of Board Meeting agenda items and ensures that Non-Executive Directors are able to speak freely and contribute effectively. In addition, he provides close oversight, guidance, advice and leadership to the Group CEO and Management.

At annual general meetings and other shareholders meetings, the Chairman plays a pivotal role in fostering constructive dialogue between shareholders, the Board and Management.


The Group CEO manages and develops the businesses of the Group. He is responsible for effectively managing and supervising the day-to-day business operations in accordance with the strategies, policies and business plans approved by the Board. The Group CEO is supported by the Executive Director in leading Management in the day-to-day operations of the Group.

Board interaction with, and independent access to, Management is encouraged. Shareholders with concerns may contact the Lead Independent Director, Mr Heng Chiang Meng, directly when contact through the normal channels via the Chairman or other Management personnel has failed to provide satisfactory resolution, or when such contact is inappropriate. The Lead Independent Director’s email address is available in the Company’s website.

The Independent Directors, led by the Lead Independent Director, meet without the presence of other Directors as and when required and provide feedback to the Chairman after such meetings.

PRINCIPlE 4Board Membership

The NC was established on 25 March 2002 and now comprises Mr Heng Chiang Meng, Mr Koh Boon Hwee and Ms Chua Kheng Yeng, Jennie, who are all Non-Executive Directors, the majority of whom are independent. The Chairman of the NC is Mr Heng Chiang Meng. Mr Heng was appointed as the Lead Independent Director in 2008.

The NC’s key Terms of Reference include making recommendations to the Board on all appointments to the Board and Board Committees, assessing the effectiveness of the Board as a whole and reviewing and recommending the appointment of key executives. The NC reviews the training and professional development programmes for the Board and maintains effective working relationships with the Board and Management.

The Company believes that the Board’s renewal must be an on-going process, to ensure good governance and to maintain relevance to the business as well as the changing needs of the Group. New Directors are normally appointed by way of a Board Resolution, after the NC has approved their nomination.

The NC will consider the Company’s current Board in terms of its size, composition, collective skills and experience and diversity. Potential candidates are selected through internal resources, referrals from existing Directors and/or external searches. Candidates should possess relevant experience and have the calibre to contribute to the Group and its businesses, and complement the skills and competencies and attributes of the existing Board and the requirements of the Group. The candidate must be a person of integrity and must be able to commit sufficient time and attention to the affairs of the Company, notwithstanding his/her other listed company board representations and/or principal commitments.

The NC is charged with the responsibility of re-nominating the Directors. The Company’s Articles of Association require one-third, or the number nearest to one-third, of the Directors, including the person holding the office of Managing Director (or any equivalent appointment however described), to retire from office. The Directors to retire every year are those who have been longest in office since their last election or appointment. No Director stays in office for more than three years without being re-elected by shareholders. In addition, a newly appointed Director will hold office only until the next annual general meeting at which he/she will be eligible for re-election. Directors of over 70 years of age are required to be re-appointed as a Director every year at the AGM under Section 153(6) of the Act before they can continue to act as a Director. This will enable all shareholders to exercise their rights in selecting all Board members.

Each member of the NC abstains from voting on any resolution, making any recommendation and/or participating in respect of matters in which he/she is interested in.

Directors who are seeking re-election at the next AGM on 22 April 2015 are stated in the Notice of AGM on page 118 of the Annual Report.

The NC conducts an annual review of the independence of each Director, taking into account the relationships and the tenure of service under the Code. Each Independent Director submits a checklist to confirm his/her independence, based on the guidelines provided by the Code, for the NC’s consideration. The NC provides its views on the independence of the Directors, to the Board for the Board’s consideration.

29

Corporate governanceWhen a Director has multiple board representations, the NC also considers whether or not the Director is able to and has adequately carried out his/her duties as a Director of the Company. The NC is of the view that there is no current need to determine the maximum number of board representations a Director should have as the NC is satisfied that sufficient time and attention are being given by the Directors to the affairs of the Company, notwithstanding that some of the Directors have multiple board representations. Board and Board Committee meetings are scheduled in advance to facilitate the Directors’ scheduling of their commitments.

The NC is satisfied that all Directors have discharged their duties adequately for the financial year ended 31 December 2014.

Key information regarding the Directors is listed in the “Board of Directors and Management” of the Annual Report. Information on the Directors is also available on www.fareastorchard.com.sg.

PRINCIPlE 5Board Performance

The responsibilities of the NC include evaluating the performance of the Board and the Chairman of the Board based on a set of criteria. The assessment criteria includes the Board’s performance against established performance objectives, namely competencies, commitment, contribution, performance, attendance, preparedness, participation and candour of the Board and Directors, contribution to ensuring effective risk management, response to problems and crisis, the Board’s relationship with the Management and adequacy of Board and Board Committee meetings held to enable proper consideration of issues. The NC is of the view that the primary objective of the assessment exercise is to create a platform for the Board members to encourage exchange of views on the Board’s strengths and shortcomings with a view to strengthening the effectiveness of the Board as a whole.

A formal review of the Board’s performance is undertaken collectively and individually by the Board annually. The evaluation exercise is carried out annually by way of a Board Assessment Checklist, which is circulated to the Board members for completion and thereafter, for the NC to review and determine the actions required to improve the corporate governance of the Company and effectiveness of the Board and Board Committees as a whole.

Informal evaluation of the performance of the Board will be undertaken on a continuous basis by the NC with input by the Executive Directors and the Chairman. The latter will act on the results of the evaluation and where appropriate, in consultation with the NC, will propose the appointment of new Directors or seek resignation of current Directors.

PRINCIPlE 6 Access to Information

The Board has separate and independent access to the Management of the Group, who keeps the Board apprised of the Group’s operations and performance by providing periodic management reports. In order to ensure that the Board is able to fulfill its responsibilities, Management is required to provide complete, adequate and timely information to the Board on issues that require their decision. Management also provides reports relating to operational and financial performance of the Group. Whenever appropriate, Managers who can provide additional insight in the matters to be discussed are invited to attend the Board meetings.

Information provided include board papers and related materials, background or explanatory information relating to matters to be brought before the Board, and copies of disclosure documents, budgets, forecasts and quarterly internal financial statements. In respect of budgets, any material variance between the projections and actual results should also be disclosed and explained.

The Directors also have separate and independent access to the Company Secretary. The role of the Company Secretary includes attendance at all Board meetings, preparation of the agenda and papers for meetings of the Board and its various committees, writing and circulating minutes of meetings, sending Board members information relating to the Group as needed, ensuring that board procedures are followed and that applicable rules and regulations are complied with. The appointment and removal of the Company Secretary are subject to the approval of the Board as a whole.


Each member of the Board has direct access to the Group’s independent professional advisors as and when necessary to enable each member to discharge his/her responsibility effectively. Any cost of obtaining professional advice will be borne by the Company.

The Company’s Articles of Association and Terms of Reference of the Board Committees provide for meetings by teleconferencing or videoconferencing where physical meetings are not possible. Communication could also be effected by electronic means such as emails.

PRINCIPlE 7 Procedures for Developing Remuneration Policies

The RC was established on 25 March 2002 and now comprises 3 members, all of whom are Independent Directors. Mr Heng Chiang Meng, the Lead Independent Director, chairs the RC. The other members of the RC are Mr Cheng Hong Kok and Mdm Ee Choo Lin Diana.

The key Terms of Reference of the RC include reviewing matters concerning remuneration of the Board, Group CEO and Management, including but not limited to Director’s fees, salaries, allowances, bonuses and benefits in kind.

The RC approves the framework of remuneration for the entire organisation, including the structuring of any long-term incentive plans. The members of the RC do not participate in any decisions concerning their own remuneration. The RC’s recommendations are submitted for the Board’s discussion or, as the case may be, approval.

The RC recommends to the Board the specific remuneration packages for Executive Directors and the Group CEO upon recruitment. Subsequently, various aspects of their remuneration will be reviewed by the RC for recommendation to the Board.

The RC members are familiar with Executive compensation matters as they manage their own businesses and/or are holding directorships in the boards of other established companies or listed companies.

The proposed Directors’ fees for 2015 were recommended in 2012 after taking into account advice from external consultants, market trends and prevailing market rates. These fees will be tabled at the AGM for shareholders’ approval.

The RC has access to appropriate advice from the Head of Human Resources, who attends all RC meetings. The RC may also seek external expert advice on remuneration of Directors and staff. In its deliberations, the RC takes into consideration industry practices and norms in compensation, in addition to the Group’s relative performance to the industry and the performance of the individual Directors. Where such expert is appointed, the Company shall disclose the names and firms of the remuneration consultants herein, and include a statement on whether the remuneration consultants have any relationships with the Company that will affect the independence and objectivity of the remuneration consultants.

The RC has reviewed the Company’s obligations arising in the event of termination of the Executive Directors’ and Key Management personnel’s contracts of service and is of the view that such contracts of service contain fair and reasonable termination clauses which are neither overly generous nor rewarding poor performance.

PRINCIPlE 8 level and Mix of Remuneration

All of the Directors receive the same amount of Director’s Fees. Members of the various Board Committees receive additional fees for serving on the respective Board Committees. The Chairman of each of these Board Committees is paid additional fees. The aggregate of all these fees is approved for payment by the Company’s shareholders at the annual general meetings of the Company. The Board will recommend the Directors’ Fees for approval at the 47th Annual General Meeting.

The RC is of the view that the Independent Directors are not over-compensated to the extent that their independence may be compromised.

The Group does not have any employee share option scheme.

31

Corporate governanceThe Executive Directors have entered into service agreements with the Company or its related corporations which link rewards to corporate and individual performance to promote shareholders’ interests, long-term success of the Group and risk management policies. The service agreements cover the terms of employment, specifically salary and other benefits. The remuneration packages of Mr Lucas Chow (before his retirement), Mr Lui Chong Chee, as the Group CEO and Managing Director, and Mr Arthur Kiong, the Executive Director and CEO of Hospitality Business include a variable performance bonus.

The RC has reviewed the Company’s obligations arising in the event of termination of the Executive Directors’ and Key Management personnel’s contracts of service and is of the view that such contracts of service contain fair and reasonable termination clauses which are not overly generous. The Company currently does not have contractual provisions to reclaim incentive component of remuneration from Executive Directors and Key Management personnel and there are no excessively long or onerous removal clauses in these service agreements. The service agreements may be terminated by the Company giving them three (3) months’ written notice or payment of salary in lieu of notice.

PRINCIPlE 9 Disclosure on Remuneration

The Directors’ remuneration consists of their fees (and salary for Executive Directors). All Directors’ Fees are subject to the approval of the shareholders at annual general meetings.

A breakdown showing the level and mix of each individual Director’s remuneration in the financial year ended 31 December 2014 is appended below. For competitive reasons, the Company is only disclosing the remuneration of each Director in percentage terms for the financial year under review.

Name of Director Fee1 Base salary1

variable / performance-related

income / bonuses Benefits in kind

% % % %

$1,250,000 to $1,499,999

Lucas Chow Wing Keung2 1.80 98.10 0.00 0.00

$1,000,000 to $1,249,999

Kiong Kim Hock Arthur 3.30 94.80 0.00 1.90

$500,000 to $749,999

Lui Chong Chee3 2.10 54.30 43.50 0.10

Below $250,000

Koh Boon Hwee 100 - - -

Ng Siok Keow 100 - - -

Tan Siok Hwee 100 - - -

Heng Chiang Meng 100 - - -

Cheng Hong Kok 100 - - -

Chua Kheng Yeng, Jennie 100 - - -

Ee Choo Lin Diana 100 - - -


Notes:1 Inclusive of allowances and Central Provident Fund contributions.2 Mr Lucas Chow Wing Keung retired as the Group CEO and Managing Director on 1 September 2014.3 Mr Lui Chong Chee was appointed as the Group CEO and Managing Director on 1 September 2014.

The remuneration of the top five (5) key executives (who are not Directors of the Company) for the financial year ended 31 December 2014 is appended below. For competitive and confidentiality reasons, the Company is only disclosing the remuneration in percentage terms for the financial year in review. The Board is of the view that full disclosure would not be in the interests of the Company as such information is confidential and sensitive and could be exploited by competitors. The Board is of the opinion that the information disclosed would be sufficient for shareholders to have an adequate appreciation of the Company’s compensation policies and practices.

Name Designation Base salary1

variable2 / performance-related

income / bonuses Benefits in kind

% % % %

$500,000 to $749,999

Raphael Saw Kheng Hwa3

Chief Operating Officer and Director of

Hospitality Division92.50 1.50 6.00

Ling Ang Kerng4 Chief Financial Officer 80.20 14.0 5.90

$250,000 to $499,999

Brian StampeDeputy Director of Hospitality Division

83.70 3.10 13.10

Below $250,000

Chung Suet Cheng Audrey5 Head, Global Sales & Marketing

95.70 3.60 0.70

Richard Lee Voon Kean6 Assistant Director of Hospitality Division

93.80 0.00 6.20

Notes:1 Inclusive of allowances and Central Provident Fund contributions2 Based on 2014 actual payout3 Mr Raphael Saw Kheng Hwa relinquished his role as the Chief Operating Officer and Director of Hospitality on 1 January 20154 Mr Ling Ang Kerng was appointed as the Chief Financial Officer of the Company on 1 January 20145 Ms Chung Suet Cheng Audrey was appointed as Head, Global Sales & Marketing on 7 March 20146 Mr Richard Lee Voon Kean resigned with effect from 13 July 2014

Key executives’ compensation consists of salary, allowances and bonuses. Bonuses are conditional upon the executives and the Group meeting certain performance targets. A significant proportion of executives’ remuneration is linked to the Group and individual performance.

For the financial year ended 31 December 2014, there was no termination, retirement or post-employment benefit granted to Directors, the Group CEO or any of the key executives.

No employee of the Company and its subsidiaries was an immediate family member of a Director or the Group CEO and whose remuneration exceeded S$50,000 during the financial year ended 31 December 2014.

33

Corporate governancePRINCIPlE 10Accountability

The Board conducts itself in ways that deliver maximum sustainable value to the shareholders. The Board promotes best practices in providing timely and full disclosure of material information in compliance with the statutory reporting requirements as a means to build an excellent business for the shareholders. The Board is accountable to shareholders and is responsible for providing a balanced and understandable assessment of the Group’s performance, position and prospects through SGXNET announcements on a quarterly basis.

In preparing the financial statements, the Board has selected suitable accounting policies and applied them consistently. The Board has made judgements and estimates that are reasonable and prudent and ensures that all applicable accounting standards have been followed. The financial statements were prepared on the basis that the Directors have reasonable expectations, having made enquiries that the Group has adequate resources to continue operations for the foreseeable future.

The Board has taken adequate steps to ensure compliance with legislative and regulatory requirements, including requirements under the listing rules of the SGX-ST, for instance, by establishing written policies where appropriate.

Management provides members of the Board with quarterly management accounts and other information in connection with certain matters or transactions, which would require Board approval. In this way, the Board is kept abreast of the operations, financial performance, position and prospects of the Group.

PRINCIPlE 11 Risk Management and Internal Controls

The Company believes that it maintains a sound system of risk management and internal controls, addressing material financial, operational, compliance and information technology (“IT”) risks, amongst other risks, to safeguard shareholders’ interests and the Group’s assets.

The Board determines the Company’s levels of risk tolerance and risk policies, and oversees Management in the design, implementation and monitoring of the risk management and internal control systems. The Group refers all significant matters to the ARC and the Board. The Board reviews, at least annually, the adequacy and effectiveness of the Group’s risk management and internal control systems.

The ARC assists the Board in determining the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives. The ARC considers the nature of the risks facing the Group and the extent to which these risks are acceptable, the likelihood of risks materialising and the Group’s ability to reduce their occurrence and impact on the business, and the cost versus the benefit of managing the risks. The ARC ensures that the internal auditor conducts reviews of the Group’s internal controls, addressing material financial, operational and compliance controls. Risk management and financial management are also assessed.

The Group has in place an Enterprise Risk Management (“ERM”) framework that consolidates the risk management practices across the Group. The consolidated approach provides the Management a formal framework and structure to identify risks and optimise available resources to mitigate the risks. The ERM framework encompasses an evaluation process to determine its adequacy and effectiveness; and accords appropriate enhancements to improve the ERM framework and structure. The framework is fundamentally aligned to best practices including those stated in the Risk Governance Guidance for Listed Boards released by the Corporate Governance Council in May 2012.

The key risks identified by the Group may be broadly categorised into the following:

Financial Risks The Group’s activities are affected by various financial risks, including interest rate risk, exchange rate risk and liquidity risk. The details of each are set out in Note 31 to the financial statements of this Annual Report.


operational RisksThe operational risks facing the Group include changes in external market conditions such as oversupply of properties, price-cutting by competitors and drop in visitor arrivals due to political instability, terrorism and health warnings. Other risks include increase in operating costs and the necessity for capital expenditure from time to time.

Compliance RisksThe Group faces compliance risks such as changes to government policies, rules and regulations relating to the property and hospitality industry within the jurisdictions where the Group operates.

It RisksFailure of critical IT systems can potentially disrupt the Group’s business. Confidential information, such as customers’ personal data, may be at risk of cyber-attacks. The Group has conducted Business Impact Analysis (BIA), through which it has identified IT-dependent critical business functions and has put in place contingency plans to mitigate the impact of IT risk.

Management undertakes periodic reviews of the Group’s past performances and conducts horizon scanning in order to identify and assess current and future risks related to the aforementioned risk categories – financial, operational, compliance and IT. Based on these reviews, Management employs reasonable endeavours in ensuring that these risks are within limits and strategies approved by the Board.

Although the Board acknowledges that it is responsible for the overall internal control framework, it also recognises that no cost effective internal control system will preclude all errors and irregularities. A system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss. The Board is satisfied that the system of risk management and internal controls that the Group has in place provides reasonable assurance against material financial misstatements or loss, safeguarding of assets, the maintenance of proper accounting records, reliability of financial information, compliance with legislation, regulations and best practices and the identification and management of business risks. The Board, with the concurrence of the ARC, is therefore of the opinion that the Group’s system of risk management and internal controls is adequate and effective to address financial, operational, compliance and IT risks of the Group in its current business environment.

The Board has received assurance from the Group CEO and the Chief Financial Officer that:(i) the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations

and finances; and(ii) the Group’s risk management and internal control systems are adequate and effective in addressing the material risks in the Group

in its current business environment, including material financial, operational, compliance and IT risks.

PRINCIPlE 12Audit & Risk Committee (“ARC”)

The Company’s ARC comprises four Directors, all of whom are Independent Directors. Mr Cheng Hong Kok is the Chairman of the ARC, the other members are Mr Heng Chiang Meng, Ms Chua Kheng Yeng, Jennie and Mdm Ee Choo Lin Diana. The Board is of the view that all members of the ARC have accounting and/or related financial management expertise and experience to discharge their responsibilities as members of ARC.

The ARC has explicit authority to investigate any matter within its Terms of Reference, which include assessing the appropriateness of mechanisms created to identify, prevent and minimise business risks; ensuring integrity of financial statements and performance, ensuring that a review of the effectiveness of the Group’s material internal controls is conducted at least annually; reviewing the independent auditor’s proposed audit scope, their remuneration, the terms of their engagement and the final audit report; reviewing the performance and considering the independence of the independent auditor and meeting with them quarterly; and reviewing all interested persons transactions.

The ARC has full access to and the co-operation of the Group’s Management and in addition, has absolute discretion to invite any Director or Management of the Group to attend its meetings, as it deems necessary.

35

Corporate governanceThe ARC has conducted an annual review of non-audit services provided by the independent auditor to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity provided by the independent auditor before confirming their re-nomination. The aggregate amount of fees paid to the independent auditor of the Company and subsidiaries for audit services for the financial year ended 31 December 2014 amounted to S$431,000. The fees for non-audit services provided by the independent auditor for the financial year ended 31 December 2014 were S$133,000 and were incurred for the completion work in relation to the transactions with The Straits Trading Company Limited as well as other advisory work. The ARC has nominated PricewaterhouseCoopers LLP (“PwC”) for re-appointment as independent auditors of the Company at the forthcoming Annual General Meeting.

From 2014, all local subsidiaries have appointed PwC as their independent auditors. All except one of the overseas subsidiaries have also appointed PwC or its affiliated firms as their independent auditors. The Board and the ARC had reviewed the appointment of a different auditor for one of its overseas subsidiary and were satisfied that the appointment of a different auditor would not compromise the standard and effectiveness of the audit of the Group.

The Company is in compliance with Rules 712, 715 and 716 of the Listing Rules in relation to its independent auditors.

In the last financial year, the ARC held four (4) meetings. In those meetings, the ARC reviewed, inter alia, the internal auditor’s report on interested party transactions as well as the various reports on other areas of the Group’s business, the internal auditor’s audit plan and fee for the current financial year, the independent auditor’s final audit report, the quarterly and year-end announcements on financial statements, the Group’s quarterly and year-end performances, and corporate governance matters.

The ARC has also met separately with the independent auditor and the internal auditor without the presence of the Company’s Management. These meetings enable the independent auditor and internal auditor to raise issues encountered in the course of their audit directly to the ARC.

During the last financial year, the ARC reviewed the Whistle Blowing Policy of the Group. The Whistle Blowing Policy provides employees with an avenue to raise concerns in good faith and confidence about possible improprieties in financial reporting or other matters without fear of reprisals. The objective of the Policy is to ensure an independent investigation of such matters for appropriate follow-up action. Details of the Whistle Blowing Policy have been made available to all employees in three different languages, namely, English, Mandarin and Bahasa Indonesia.

Where applicable, the ARC was provided with updates and explanation by the Chief Financial Officer and the independent auditors during the financial year, on changes to the accounting standards and issues which have direct impact on the Group’s consolidated financial statements.

PRINCIPlE 13Internal Audit

During the financial year in review, the Group had outsourced its internal audit function to the Group Internal Audit Department (“GIA”) of Far East Organization. GIA reported directly and primarily to the ARC and also reported administratively to the Group CEO. The Group has appointed RSM Ethos Pte Ltd to provide the internal audit services for the financial year ending 31 December 2015.

The ARC ensures the adequacy of the internal audit function by examining the scope of the internal auditors’ work, the quality of their reports, their qualifications and training, their relationship with the independent auditors and their independence of the areas reviewed. The internal auditors have unfettered access to the ARC, the Company’s documents, records, properties and personnel.

Having regard to the Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors, and having reviewed the functions and organisational structure of the internal auditors, the ARC is satisfied that internal auditors meet the requisite standards, are adequately resourced, and have appropriate standing within the Group.

The ARC reviews, at least once a year, the adequacy and effectiveness of the internal auditors.


PRINCIPlE 14Shareholder Rights

The Company practises fair and equitable treatment to all shareholders and stakeholders. To facilitate the exercise of ownership rights, the Company provides all material information which would materially affect price or value of shares in an accurate and timely manner via SGXNET, so as to enable shareholders to make informed decisions.

Shareholders are entitled to and encouraged to attend all general meetings to stay informed of the Company’s goals and strategies and to ensure a high level of accountability. The Board is satisfied that shareholders have been given the opportunity to participate effectively and to vote at general meetings. Shareholders are also informed of voting procedures governing general meetings.

The Company’s Articles of Association allow shareholders to vote in person or by proxy or by attorney, or in the case of a corporation by a representative. A shareholder may appoint up to two proxies to attend and vote in his stead at a general meeting. For shareholders who hold shares through nominees such as CPF and custodian banks, they are allowed to attend the general meetings as observers, subject to rules of general meetings and availability of seats. The Company has not amended its Articles of Association to provide for other methods of voting in absentia due to security and integrity concerns. The Company noted that provision for such other methods of voting in absentia would also require a costly system of authentication to ensure the integrity of information and the identity of shareholders in telephonic and electronic media.

PRINCIPlE 15 Communication with Shareholders

The Company is committed to making timely, full and accurate disclosures in accordance with the listing rules of the SGX-ST and the Code. It strives to disclose information, including price sensitive information, to its shareholders in a timely and accurate manner within the mandatory periods. Such announcements include the quarterly and full-year results, material transactions and other major developments that will have impact on the Company or Group. It also responds to queries from investors, fund managers and analysts without making selective disclosures, through various channels such as news releases, annual reports, SGXNET and the Company’s website.

The first three quarters’ financial results are released to shareholders no later than 45 days from the end of each quarter. Full year results are released no later than 60 days from the financial year end.

The Company recognises the importance of regular, effective and timely communication with the shareholders.

The Company’s main forum for dialogue with shareholders takes place at its annual general meetings, whereat members of the Board, Management and the independent auditors are in attendance. To solicit and understand shareholders’ views, shareholders are given the opportunity at the annual general meetings to express their views and ask questions regarding the Group. The Company conducts surveys at each annual general meeting to receive feedback from shareholders.

Notices of general meetings are despatched to shareholders, together with explanatory notes or a circular on items of special business, on a timely basis in accordance with the legal requirements.

PRINCIPlE 16 Conduct of Shareholder Meetings

The procedures at general meetings facilitate opportunities for shareholders to participate and communicate with the Directors.

At general meetings, each distinct issue is the subject of a separate resolution.

The Chairmen of the Board and the Board Committees are usually available at the Company’s general meetings to address questions raised.

37

Corporate governanceThe Company’s independent auditors are also present at annual general meetings of the Company to address shareholders’ queries on the conduct of audit and the preparation and content of the auditor’s report. Shareholders also have the opportunity to communicate their views and discuss with the Board and Management after the general meetings.

The Company prepares Minutes of general meetings that include substantial and relevant comments or queries from shareholders relating to the agenda of the meetings, and responses from the Board and Management. These Minutes will be available to shareholders upon their request.

Shareholders are given opportunities to vote at general meetings. The voting process for the current and future annual general meetings shall be by electronic polling for all resolutions for greater transparency in the voting process. Votes cast for or against and the respective percentages on each resolution will be tallied and displayed ‘live’ on-screen to shareholders immediately after each poll is conducted. The total number of votes cast for or against the resolutions and the respective percentages will also be announced in a timely manner after the AGM via SGXNET.

DEAlINgS IN SECuRItIES

On an annual basis, the Company issues a securities trading policy to its Directors and employees where they are reminded that they should refrain from dealing in the securities of the Company:

(i) during the two weeks before and up to the date of announcement of the Company’s first three quarters’ results and during the one month before and up to the date of announcement of the full year results;

(ii) on short term considerations; and

(iii) at any time if they are in possession of unpublished material price-sensitive information.

The Company also issues a quarterly circular to its Directors and employees reminding them of the prohibited period from dealing in the Company’s securities before the release of the results and at any time if they are in possession of unpublished material price-sensitive information.

MAtERIAl CoNtRACtS

Save for the transactions set out in the Company’s circular to shareholders dated 24 June 2013 and the related parties transactions as disclosed in the Financial Statements and this Annual Report, no material contract involving the interests of any Director or controlling shareholder of the Group has been entered into by the Company or any of its subsidiaries since the end of the financial year and no such contract subsisted at the end of the financial year.

uSE oF PRoCEEDS

The Company has utilised all of the net proceeds raised from the sale of the Hospitality Assets during the financial year in review.


INtEREStED PERSoN tRANSACtIoNS

Interested person transactions carried out during the financial year which fall under Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited are as follows:

Name of interested person

aggregate value of all interested person

transactions conducted under shareholders’ mandate

pursuant to rule 920 of the Listing manual (excluding

transactions less than $100,000)

aggregate value of all interested person transactions

during the financial year under review (excluding transactions less

than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)

$’000 $’000

China Classic pte Ltd

Hospitality management income 115 -

Dollar Land Singapore private Limited


Far east Hospitality real estate investment Trust

Property management income 549 -

Rental expense on operating leases

- offices (1,050) -

- hotels and serviced residences (27,301) -

Far east management (private) Limited

Management service fees (2,013) -

Hospitality services (1,668) -

Project management service fees (183) -

Rental income on operating leases – offices 235 -

Far east organization Centre pte Ltd

Hospitality management income 2,585 -

Rental income on operating leases – offices 102 -

Far east property Sales pte Ltd

Sales and marketing service fees (665) -

39

Corporate governance

Name of interested person

aggregate value of all interested person

transactions conducted under shareholders’ mandate

pursuant to rule 920 of the Listing manual (excluding

transactions less than $100,000)

aggregate value of all interested person transactions

during the financial year under review (excluding transactions less

than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)

$’000 $’000

golden Development private Limited


golden Landmark pte Ltd


Lyon Cleaning & maintenance Services pte Ltd

Hospitality services (274) -

orchard mall pte Ltd


orchard parksuites pte Ltd


oxley Hill properties pte Ltd


riverland pte Ltd


Serene Land pte Ltd


Transurban properties pte Ltd


The hospitality management income stated above has taken into account the waiver of payments required, as described in paragraph 2.1.6(ii) of Appendix H in the circular to the shareholders dated 19 June 2012 (the “Circular”), from Far East Hospitality Management (S) Pte. Ltd., a subsidiary of the Group, by Far East Organization (as defined in the Circular).


Financial Report42 Directors’ Report • 44 Statement by Directors • 45 Independent Auditor’s Report • 46 Consolidated Statement of Comprehensive Income • 48 Balance Sheet – Group • 49 Balance Sheet – Company • 50 Consolidated Statement of Changes in Equity • 51 Consolidated Statement of Cash Flows • 52 Notes to the Financial Statements

4141

DIRECTORS’ REPORTFor the financial year ended 31 December 2014

The directors present their report to the members together with the audited financial statements of Far East Orchard Limited (the “Company”) and its subsidiaries (the “Group”) for the financial year ended 31 December 2014 and the balance sheet of the Company as at 31 December 2014.

Directors

The Directors of the Company in office at the date of this report are as follows:

Mr Koh Boon HweeMr Lui Chong Chee (appointed on 1 September 2014)Mr Kiong Kim Hock ArthurMdm Ng Siok KeowMdm Tan Siok HweeMr Heng Chiang MengMr Cheng Hong KokMs Chua Kheng Yeng, JennieMdm Ee Choo Lin Diana

ArrAngements to enAble Directors to Acquire shAres AnD Debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors’ interests in shAres or Debentures

(a) According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows:

Number of ordinary shares

Holdings registered in name of director

Holdings in which director is deemed to have an interest

At 31December

2014

At 1January2014

At 31December

2014

At 1January2014

Far east orchard limited

Mdm Ng Siok Keow 14,469 14,469 77,038 77,038

Yeo hiap seng limited

Mdm Ng Siok Keow 3,195 3,195 15,978 15,978

(b) The directors’ interests in the ordinary shares of the Company as at 21 January 2015 were the same as those as at 31 December 2014.

Directors’ contrActuAl beneFits

Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements and in this report, and except thatcertain directors have employment relationships with related corporations of the ultimate holding company, and have received remuneration in those capacities.


DIRECTORS’ REPORTFor the financial year ended 31 December 2014

shAre options

No options were granted during the financial year to subscribe for unissued shares of the Company or its subsidiaries.

No shares were issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries.

There were no unissued shares of the Company or its subsidiaries under option at the end of the financial year.

AuDit & risk committee

The members of the Audit & Risk Committee at the end of the financial year were as follows:

Mr Cheng Hong Kok (Chairman)Mr Heng Chiang MengMs Chua Kheng Yeng, Jennie (appointed on 1 April 2014) Mdm Ee Choo Lin Diana

All members of the Audit & Risk Committee were independent non-executive directors.

The Audit & Risk Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Committee reviewed:

• the scope and the results of internal audit procedures with the internal auditor;• the audit plan of the Company’s independent auditor and any recommendations on internal accounting controls arising from the

statutory audit;• the assistance given by the Company’s management to the independent auditor; and• the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 31

December 2014 before their submission to the Board of Directors, as well as the Independent Auditor’s Report on the balance sheet of the Company and the consolidated financial statements of the Group.

The Audit & Risk Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

inDepenDent AuDitor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.

On behalf of the directors

mr lui chong chee mr kiong kim hock ArthurDirector Director

27 March 2015

43

STaTEmEnT by DIRECTORSFor the financial year ended 31 December 2014

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 46 to 115 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2014 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the directors

mr lui chong chee mr kiong kim hock ArthurDirector Director

27 March 2015


InDEPEnDEnT auDITOR’S REPORT To the Members of Far East Orchard Limited

report on the FinAnciAl stAtements

We have audited the accompanying financial statements of Far East Orchard Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 46 to 115, which comprise the consolidated balance sheet of the Group and balance sheet of the Company as at 31 December 2014, the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows ofthe Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2014, and of the results, changes in equity and cash flows of the Group for the financial year ended on that date.

report on other legAl AnD regulAtorY requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore, of which we are the auditors, have been properly kept in accordance with the provisions of the Act.

PricewaterhouseCoopers LLPPublic Accountants and Chartered AccountantsSingapore, 27 March 2015

45

COnSOlIDaTED STaTEmEnT Of COmPREhEnSIvE InCOmEFor the financial year ended 31 December 2014

Note 2014 2013

$’000 $’000

Sales 4 315,537 158,569

Cost of sales (231,110) (114,040)

Gross profit 84,427 44,529

Other income 7 3,896 3,099

Other gains – net 8 3,634 11,004

Expenses

− Distribution and marketing (11,672) (8,007)

− Administrative (27,550) (15,519)

− Finance 9 (4,321) (812)

− Other (8,102) (20,473)

Share of results of

− joint ventures 17 5,797 4,120

− associated companies 16 2,649 3,108

Profit before income tax 48,758 21,049

Income tax (expense)/credit 10(a) (13,279) 463

net profit 35,479 21,512

other comprehensive income:

items that may be reclassified subsequently to profit or loss:

Cash flow hedges

− Fair value losses 27(iv) - (5,814)

− Reclassification 27(iv) - 5,814

Share of other comprehensive income/(loss) of

− joint ventures 7,215 (426)

− associated companies (61) (564)

Currency translation losses arising from consolidation (8,959) (7,744)

(1,805) (8,734)

items that will not be reclassified subsequently to profit or loss:

Revaluation gains on property, plant and equipment – net 27(i) 7,102 6,630

Tax on revaluation gains 25 (7,350) (315)

other comprehensive loss, net of tax (2,053) (2,419)

total comprehensive income 33,426 19,093

The accompanying notes form an integral part of these financial statements.


COnSOlIDaTED STaTEmEnT Of COmPREhEnSIvE InCOmEFor the financial year ended 31 December 2014

Note 2014 2013

$’000 $’000

net profit attributable to:

− Equity holders of the Company 35,498 29,385

− Non-controlling interest (19) (7,873)

35,479 21,512

total comprehensive income attributable to:

− Equity holders of the Company 31,050 29,094

− Non-controlling interest 2,376 (10,001)

33,426 19,093

basic and diluted earnings per share for net profit attributable to equity holders of the company

(cents per share) 11 8.97 7.61


47

balanCE ShEET – GROuPAs at 31 December 2014

Note 2014 2013

$’000 $’000

Assets

current assets

Cash and cash equivalents 12 98,386 264,975

Trade and other receivables 13 81,376 67,278

Inventories 666 857

Development properties 14 38,691 40,365

Properties held for sale 15 123,863 140,417

342,982 513,892

non-current assets

Investments in associated companies 16 8,424 7,812

Investments in joint ventures 17 241,107 282,167

Other receivables 13 221,131 73,617

Investment properties 19 315,598 304,475

Property, plant and equipment 20 592,537 588,204

Intangible assets 21 151,506 155,907

Deferred income tax assets 25 1,413 4,765

1,531,716 1,416,947

total assets 1,874,698 1,930,839

liAbilities

current liabilities

Trade and other payables 22 127,408 140,577

Current income tax liabilities 10(b) 7,519 4,761

Borrowings 23 86,264 -

Provisions 24 5,923 8,268

227,114 153,606

non-current liabilities

Other payables 22 406,687 503,265

Deferred income tax liabilities 25 27,481 17,371

Borrowings 23 19,476 89,415

Provisions 24 12,706 14,982

466,350 625,033

total liabilities 693,464 778,639

net Assets 1,181,234 1,152,200

equitY

capital and reserves attributable to equity holders of the company

Share capital 26 439,617 420,616

Revaluation and other reserves 27 340,003 344,451

Retained profits 28 389,796 377,691

1,169,416 1,142,758

non-controlling interest 11,818 9,442

totAl equitY 1,181,234 1,152,200



balanCE ShEET – COmPanyAs at 31 December 2014

Note 2014 2013

$’000 $’000

Assets

current assets

Cash and cash equivalents 12 56,031 199,548

Trade and other receivables 13 167,003 169,161

Inventories 36 39

223,070 368,748

non-current assets

Investments in associated companies 16 696 696

Investment in a joint venture 17 300 300

Investments in subsidiaries 18 509,154 553,532

Other receivables 13 480,052 281,207

Investment properties 19 120,066 116,209

Property, plant and equipment 20 361,156 371,673

1,471,424 1,323,617

total assets 1,694,494 1,692,365

liAbilities

current liabilities

Trade and other payables 22 15,624 66,420

Current income tax liabilities 10(b) 494 2,617

16,118 69,037

non-current liabilities

Other payables 22 605,295 575,845

Deferred income tax liabilities 25 548 648

605,843 576,493

total liabilities 621,961 645,530

net Assets 1,072,533 1,046,835

equitY

capital and reserves attributable to equity holders of the company

Share capital 26 439,617 420,616

Revaluation and other reserves 27 329,629 339,686

Retained profits 28 303,287 286,533

totAl equitY 1,072,533 1,046,835


49

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COnSOlIDaTED STaTEmEnT Of CaSh flOwSFor the financial year ended 31 December 2014


Note 2014 2013$’000 $’000

cash flows from operating activitiesNet profit 35,479 21,512Adjustments for:

− Income tax expense/(credit) 13,279 (463)− Depreciation of property, plant and equipment 9,334 3,499− Amortisation of intangible assets 3,781 2,243− Impairment loss on a country club membership 59 -− Interest income (3,210) (1,971)− Interest expense 4,321 812− Loss/(gain) on disposal of property, plant and equipment 18 (1)− Fair value gains on investment properties (12,578) (14,700)− Revaluation losses on property, plant and equipment 1,392 -− Impairment loss on property, plant and equipment 781 -− Foreseeable loss on a development property - 459− Share of results of joint ventures (5,797) (4,120)− Share of results of associated companies (2,649) (3,108)− Unrealised currency translation losses 6,743 1,444

50,953 5,606Change in working capital:

− Trade and other receivables (14,587) (38,110)− Inventories 168 49− Development properties and properties held for sale 17,515 70,364− Trade and other payables (16,331) (5,823)− Provisions (4,022) (1,517)

Cash generated from operations 33,696 30,569Interest paid (224) -Income tax paid – net (3,834) (2,384) net cash provided by operating activities 29,638 28,185

cash flows from investing activitiesAcquisition of businesses, net of cash acquired 34(b) - (62,020)Additions to property, plant and equipment (15,359) (15,136)Disposal of property, plant and equipment 340 1Dividends received from joint venture 2,881 -Investments in joint ventures (71,078) (146,992)Advances to joint ventures (145,343) (39,581)Advances from a joint venture 10,920 41,580Interest received 1,507 2,297 net cash used in investing activities (216,132) (219,851)

cash flows from financing activitiesProceeds from borrowings 22,712 12,340Repayment of borrowings (4,161) (7,979)Interest paid (5,180) (967)Dividends paid to shareholders (4,392) (42,200)Advances from non-controlling interest 11,910 46,128 net cash provided by financing activities 20,889 7,322

net decrease in cash and cash equivalents (165,605) (184,344)Cash and cash equivalents at beginning of financial year 12 264,975 450,820Effects of currency translation on cash and cash equivalents (984) (1,501) cash and cash equivalents at end of financial year 12 98,386 264,975

51

nOTES TO ThE fInanCIal STaTEmEnTSFor the financial year ended 31 December 2014

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. generAl inFormAtion

Far East Orchard Limited (the “Company”) is listed on the Singapore Exchange and incorporated and domiciled in Singapore. The address of its registered office is 1 Tanglin Road #05-01, Orchard Parade Hotel, Singapore 247905.

The principal activities of the Company are investment holding, hotel operations, property development and property investment. The principal activities of its significant subsidiaries are included in Note 37.

2. signiFicAnt Accounting policies

2.1 basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

interpretations and amendments to published standards effective in 2014

The Group had early adopted the following new and amended standards that were not effective in 2013, together with the consequential amendments to other FRSs, for the financial year ended 31 December 2013.

• FRS 110 Consolidated Financial Statements and Amendment to FRS 27 (revised 2011) Separate Financial Statements• FRS 111 Joint Arrangements and Amendment to FRS 28 Investments in Associates and Joint Ventures• FRS 112 Disclosure of Interests in Other Entities

On 1 January 2014, the Group adopted the other new or amended FRS and Interpretations of FRS (“INT FRS”) that are mandatory for application for the financial year. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the accounting policies and disclosures in the financial statements of the Group and the Company, and had no material effect on the amounts reported for the current or prior financial years.

2.2 revenue recognition

Sales comprise the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group’s activities. Sales are presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group.

The Group assesses its role as an agent or principal for each transaction and in an agency arrangement the amounts collected on behalf of the principal are excluded from revenue. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the related receivables is reasonably assured and the specific criteria for each of the Group’s activities are met as follows:



2. signiFicAnt Accounting policies (continued)

2.2 revenue recognition (continued)

(a) hospitality operations Revenue from operation of owned or leased hospitality properties is recognised when the accommodation and related

services are provided.

(b) hospitality management fees and other fees

(i) Hospitality management fees Management fees earned from hospitality properties managed by the Group are recognised when services are

rendered under the terms of the contract. The fees include a base fee, which is generally a percentage of the hospitality property’s revenue, and/or an incentive fee, which is generally based on the hospitality property’s profitability.

(ii) Other fees Other fees include centralised services fees, property management fees, project management fees, technical services

fees and other incidental fees. The fees are recognised when services are rendered under the terms of the contract.

(c) sale of development properties Revenue from sale of development properties under construction is recognised when the properties are delivered to

the buyers, except for cases where the control and risk and rewards of the property are transferred to the buyers as construction progresses, in which case sales are recognised by reference to the stage of completion of the properties. Refer to Note 2.5 Development properties for the accounting policy for such cases.

(d) sale of properties held for sale Revenue from sale of properties held for sale is recognised when the properties are delivered to the buyers.

(e) rental income Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over

the lease term.

(f) interest income Interest income is recognised using the effective interest method.

(g) Dividend income Dividend income is recognised when the right to receive payment is established.

53



2.3 group accounting

(a) subsidiaries

(i) Consolidation Subsidiaries are entities (including structured entities) over which the Group has control. The Group controls an

entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests comprise the portion of net results of operations and net assets of a subsidiary which is attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance.

(ii) Acquisitions The acquisition method of accounting is used to account for business combinations entered into by the Group.

The consideration transferred for the acquisition of a subsidiary or business comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and pre-existing equity interest in the subsidiary measured at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

The excess of (a) the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the (b) fair values of the identifiable net assets is recorded as goodwill. Refer to Note 2.7(a) Intangible assets – Goodwill on acquisitions for the subsequent accounting policy on goodwill.




2.3 group accounting (continued)

(a) subsidiaries (continued)

(iii) Disposals When a change in the Group’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the

assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts previously recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained profits if required by a specific accounting standard.

Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognised in profit or loss.

Refer to Note 2.10 Investments in subsidiaries, joint ventures and associated companies for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.

(b) transactions with non-controlling interests Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are

accounted for as transactions with equity owners of the Company. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised within equity attributable to the equity holders of the Company.

(c) Joint operations The Group’s joint operations are joint arrangements whereby the parties (the joint operators) that have joint control of

the arrangement have rights to the assets, and obligations to the liabilities, relating to the arrangement.

The Group recognises, in relation to its interest in the joint operation:• its assets, including its share of any assets held jointly;• its liabilities, including its share of any liabilities incurred jointly;• its revenue from the sale of its share of the output arising from the joint operation;• its share of the revenue from the sale of the output by the joint operation; and• its expenses, including its share of any expenses incurred jointly.

When the Group sells or contributes assets to a joint operation, the Group recognises gains or losses on the sale or contribution of assets that is attributable to the interest of the other joint operators. The Group recognises the full amount of any loss when the sale or contribution of assets provides evidence of a reduction in the net realisable value, or an impairment loss, of those assets.

The accounting policies of the assets, liabilities, revenues and expenses relating to the Group’s interest in a joint operation have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.

55




(d) Associated companies and joint ventures

Associated companies are entities over which the Group has significant influence, but not control, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%.

Joint ventures are entities over which the Group has joint control as a result of contractual arrangements, and rights to the net assets of the entities.

Investments in associated companies and joint ventures are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any.

(i) Acquisitions Investments in associated companies and joint ventures are initially recognised at cost. The cost of an acquisition

is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associated companies and joint ventures represents the excess of the cost of acquisition of the associated company or joint venture over the Group’s share of the fair value of the identifiable net assets of the associated company or joint venture and is included in the carrying amount of the investments.

(ii) Equity method of accounting In applying the equity method of accounting, the Group’s share of its associated companies and joint ventures’ post-

acquisition profits or losses are recognised in profit or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post-acquisition movements and distributions received from the associated companies and joint ventures are adjusted against the carrying amount of the investments. When the Group’s share of losses in an associated company or joint venture equals to or exceeds its interest in the associated company or joint venture, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations to make, or has made, payments on behalf of the associated company or joint venture. If the associated company or joint venture subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Unrealised gains on transactions between the Group and its associated companies and joint ventures are eliminated to the extent of the Group’s interest in the associated companies and joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The accounting policies of associated companies and joint ventures have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.





(d) Associated companies and joint ventures (continued)

(iii) Disposals Investments in associated companies and joint ventures are derecognised when the Group loses significant influence

or joint control. If the retained equity interest in the former associated company or joint venture is a financial asset, the retained equity interest is remeasured at fair value. The difference between the carrying amount of the retained equity interest at the date when significant influence or joint control is lost, and its fair value and partial disposal proceeds, is recognised in profit or loss.

Gains and losses arising from partial disposals or dilutions in investments in associated companies and joint ventures in which significant influence or joint control is retained are recognised in profit or loss.

Refer to Note 2.10 Investments in subsidiaries, joint ventures and associated companies for the accounting policy on investments in associated companies and joint ventures in the separate financial statements of the Company.

2.4 property, plant and equipment

(a) measurement

(i) Land and buildings Land and buildings are initially recognised at cost and subsequently carried at the revalued amount less accumulated

impairment losses, if any.

Land and buildings are revalued by independent professional valuers on triennial basis and whenever their carrying amounts are likely to differ materially from their revalued amounts. When an asset is revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset. The net amount is then restated to the revalued amount of the asset.

Increases in carrying amounts arising from revaluation, including currency translation differences, are recognised in other comprehensive income, unless they offset previous decreases in the carrying amounts of the same asset, in which case, they are recognised in profit or loss. Decreases in carrying amounts that offset previous increases of the same asset are recognised in other comprehensive income. All other decreases in carrying amounts are recognised in profit or loss.

(ii) Other property, plant and equipment Other property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated

depreciation and accumulated impairment losses, if any.

(iii) Components of costs The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost

that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs. Refer to Note 2.8 for the accounting policy on borrowing costs.

57



2.4 property, plant and equipment (continued)

(b) Depreciation Freehold land and construction-in-progress are not depreciated. Depreciation on other items of property, plant and

equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

Useful lives

Buildings 50 years

Plant, equipment, furniture and fittings 3–10 years

Motor vehicles 5–10 years

Other assets 5–10 years

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise.

(c) subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the

carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred.

(d) Disposal On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying

amount is recognised in profit or loss within “Other gains – net”. Any amount in revaluation reserve relating to that item is transferred to retained profits directly.




2.5 Development properties

Development properties refer to properties developed for sale.

Development properties that are unsold are carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.

Sale of development properties under construction in respect of which sale and purchase agreements are entered into prior to completion of construction are recognised when the properties are delivered to the buyers, except in cases where the control and risk and rewards of the property are transferred to the buyers as construction progresses.

For sales of development properties of the Group that are within the scope as described in paragraph 2 of the Accompanying Note to INT FRS 115 Agreements for the Construction of Real Estate, the Group recognises revenue for sales of such development properties by reference to the stage of completion of the properties.

The stage of completion is determined by reference to the proportion of construction costs incurred to date, as certified by the architects or quantity surveyors, to the estimated total construction costs for the project. When it is probable that the total development costs will exceed the total revenue, the expected loss is recognised as expense immediately.

At balance sheet date, the cumulative costs incurred plus recognised profits (less recognised losses, if any) on each contract is compared against the progress billings. Where the cumulative costs incurred (less recognised losses) exceed progress billings, the balance is presented as “Due from customers” within “Trade and other receivables”. Where progress billings exceed the cumulative costs incurred plus recognised profits (less recognised losses), the balance is shown as “Due to customers” within “Trade and other payables”.

Progress billings not yet paid by customers and retentions by customers are included within “Trade and other receivables”. Advances received are included within “Trade and other payables”.

2.6 properties held for sale

Properties held for sale refer to completed properties that are held for sale. They are carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

59



2.7 intangible assets

(a) goodwill on acquisitions Goodwill on acquisitions of subsidiaries and businesses represents the excess of (a) the sum of the consideration transferred,

the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previously-held equity interest in the acquiree over (b) the fair value of the identifiable assets acquired net of the fair values of the liabilities and any contingent liabilities assumed.

Goodwill on subsidiaries and joint operations is recognised separately as intangible assets and carried at cost less accumulated impairment losses, if any.

Goodwill on associated companies and joint ventures is included in the carrying amount of the investments.

Gains and losses on the disposal of subsidiaries, joint operations, associated companies and joint ventures include the carrying amount of goodwill relating to the entity sold.

(b) Acquired hospitality lease and management agreements Hospitality lease and management agreements acquired are initially recognised at cost and are subsequently carried at

cost less accumulated amortisation and accumulated impairment losses, if any. These costs are amortised to profit or loss using the straight-line method over the term of the agreements of 5 to 40 years.

2.8 borrowing costs

Borrowing costs are recognised in profit or loss using the effective interest method except for those costs that are directly attributable to the construction of assets or development of properties. This includes those costs on borrowings acquired specifically for the construction of assets or development of properties, as well as those in relation to general borrowings used to finance the construction of assets or development of properties.

The actual borrowing costs incurred during the period up to the issuance of the temporary occupation permit less any investment income on temporary investment of these borrowings, are capitalised in the cost of the asset under construction or property under development. Borrowing costs on general borrowings are capitalised by applying a capitalisation rate to construction or development expenditures that are financed by general borrowings.




2.9 investment properties

Investment properties include those portions of land and buildings that are held for long-term rental yields and/or for capital appreciation and land under operating leases that is held for long-term capital appreciation or for a currently indeterminate use.

Investment properties are initially recognised at cost and subsequently carried at fair value, determined annually by independent professional valuers on the highest-and-best-use basis. Changes in fair values are recognised in profit or loss.

Investment properties are subject to renovations or improvements at regular intervals. The cost of major renovations and improvements is capitalised and the carrying amounts of the replaced components are recognised in profit or loss. The cost of maintenance, repairs and minor improvements is recognised in profit or loss when incurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in profit or loss.

2.10 investments in subsidiaries, joint ventures and associated companies

Investments in subsidiaries, joint ventures and associated companies are carried at cost less accumulated impairment losses, if any, in the Company’s balance sheet. On disposal of such investments, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

2.11 impairment of non-financial assets

(a) goodwill Goodwill recognised separately as an intangible asset is tested for impairment annually and whenever there is indication

that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGUs”) that is expected to benefit from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and

then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.

An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period.

61



2.11 impairment of non-financial assets (continued)

(b) other intangible assets property, plant and equipment investments in subsidiaries, joint ventures and associated companies Other intangible assets, property, plant and equipment and investments in subsidiaries, joint ventures and associated

companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss, unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease. Refer to Note 2.4 Property, plant and equipment for the treatment of a revaluation decrease.

An impairment loss for an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense, a reversal of that impairment is also recognised in profit or loss.




2.12 Financial assets

loans and receivables

Cash and cash equivalents and trade and other receivables are initially recognised at fair value plus transaction costs and subsequently carried at amortised cost using the effective interest method, less accumulated impairment losses, if any. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as

the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss.

The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.

2.13 Financial guarantees

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries and joint ventures. These guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries or joint ventures fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially recognised at their fair values, if material, plus transaction costs in the Company’s balance sheet.

Financial guarantees are subsequently amortised to profit or loss over the period of the subsidiaries’ and joint ventures’ borrowings, unless it is probable that the Company will reimburse the banks for an amount higher than the unamortised amount. In this case, the financial guarantees shall be carried at the expected amount payable to the banks in the Company’s balance sheet.

Intra-group transactions are eliminated on consolidation.

2.14 borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

63



2.15 trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less. Otherwise, they are presented as non-current liabilities.

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method.

2.16 Derivative financial instruments and hedging activities

A derivative financial instrument is initially recognised at its fair value on the date the contract is entered into and is subsequently carried at its fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised in profit or loss when the changes arise.

The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategies for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an on-going basis, of whether the derivatives designated as hedging instruments are highly effective in offsetting changes in fair value or cash flows of the hedged items.

The carrying amount of a derivative designated as a hedge is presented as a non-current asset or liability if the remaining expected life of the hedged item is more than 12 months, and as a current asset or liability if the remaining expected life of the hedged item is less than 12 months. The fair value of a trading derivative is presented as a current asset or liability.

The Group had entered into currency forwards that qualify as cash flow hedges against a highly probable forecasted transaction in a foreign currency. The fair value changes on the effective portion of the currency forwards designated as cash flow hedges are recognised in other comprehensive income, accumulated in the hedging reserve and transferred to the cost of a hedged non-monetary asset upon acquisition.

The fair value changes on the ineffective portion of currency forwards are recognised immediately in profit or loss. When a forecasted transaction is no longer expected to occur, the gains and losses that were previously recognised in other comprehensive income are reclassified to profit or loss immediately.

2.17 Fair value estimation of financial assets and liabilities

The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.




2.18 operating leases

(a) When the group is the lessee The Group leases hospitality properties and offices under operating leases from non-related and related parties (Note 32(a)).

Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease.

Contingent rents are recognised as an expense in profit or loss when incurred.

(b) When the group is the lessor The Group leases investment properties under operating leases to non-related parties and related parties (Note 32(a)).

Leases where the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in profit or loss on a straight-line basis over the lease term.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease income.

2.19 income taxes

Current income tax for current and prior financial years is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associated companies and joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.

65



2.19 income taxes (continued)

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities, except for investment properties. Investment property measured at fair value is presumed to be recovered entirely through sale.

Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.

2.20 provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

2.21 employee compensation

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

2.22 currency translation

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore Dollars, which is the functional currency of the Company.




2.22 currency translation (continued)

(b) transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss. However, in the consolidated financial statements, currency translation differences arising from borrowings in foreign currencies and other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations, are recognised in other comprehensive income and accumulated in the currency translation reserve.

When a foreign operation is disposed of or any loan forming part of the net investment of the foreign operation is repaid, a proportionate share of the accumulated currency translation differences is reclassified to profit or loss, as part of the gain or loss on disposal.

Currency translation differences arising from borrowings are presented as “Finance expenses” in the profit or loss. All other currency translation differences impacting profit or loss are presented as “Other gains – net”.

Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.

(c) translation of group entities’ financial statements

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing exchange rates at the reporting date;

(ii) income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) all resulting currency translation differences are recognised in other comprehensive income and accumulated in the currency translation reserve. These currency translation differences are reclassified to profit or loss on disposal or partial disposal of the entity giving rise to such reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and translated at the closing rates at the reporting date.

2.23 segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker who is responsible for allocating resources and assessing performance of the operating segments.

67



2.24 cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, net of bank overdrafts, if any. Bank overdrafts, if any, are presented as current borrowings on the balance sheet.

2.25 share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.

2.26 Dividends to company’s shareholders

Dividends to Company’s shareholders are recognised when the dividends are approved for payment.

2.27 reclassification of comparative figures

Certain comparative figures in the consolidated statement of comprehensive income and balance sheet of the Group have been reclassified to conform to current year presentation. The reclassification did not have any material impact to the comparative figures.

3. criticAl Accounting estimAtes AnD Assumptions

Estimates and assumptions are continually evaluated based on historical experience and various other factors that are believed to be reasonable under the current circumstances.

(a) Valuation of investment properties and property, plant and equipment

As at 31 December 2014, the Group’s investment properties and land and buildings classified under property, plant and equipment are stated at their estimated fair values that are determined by independent professional valuers. These estimated fair values may differ significantly from the prices at which these properties can be sold due to the actual negotiations between willing buyers and sellers as well as changes in assumptions and conditions arising from unforeseen events. Consequently, the actual results and the realisation of these properties could also differ significantly from the estimates set forth in these financial statements.

If the actual fair values of investment properties increase or decrease by 1.0% from the estimates, the net assets and profit after tax of the Group will increase or decrease by $3,059,000 (2013: $2,969,000).

If the actual fair values of land and buildings classified under property, plant and equipment increase or decrease by 1.0% from the estimates, the net assets of the Group will increase or decrease by $4,938,000 (2013: $4,908,000).



3. criticAl Accounting estimAtes AnD Assumptions (continued)

(b) sale of properties under development

The Group uses the percentage-of-completion method to account for its sales of a property under development. The stage of completion is determined by reference to the proportion of construction costs incurred to date, as certified by the quantity surveyor, to the estimated total construction costs for the project.

Significant assumptions are required to estimate the total construction costs that will affect the determination of the stage of completion and therefore the revenue and profits recognised. In making these assumptions, management has relied on past experience and the work of the quantity surveyor.

If the actual total construction costs increased or decreased by 1.0% (2013: 2.0%) from the estimates, gross profit and profit before tax of the Group will decrease or increase by $1,185,000 or $1,209,000 (2013: $866,000 or $902,000) respectively.

(c) impairment testing of goodwill

Goodwill is tested for impairment annually and whenever there is an indication that the goodwill may be impaired. As at 31 December 2014, the carrying amount of goodwill is allocated to two CGUs: (1) $42,155,000 (2013: $42,155,000) to management services under the hospitality business segment, Singapore and (2) $16,116,000 (2013: $16,736,000) to property ownership. As at 31 December 2014, there is no impairment of the goodwill based on the recoverable amounts of relevant CGUs that were determined based on value-in-use calculations that require the use of certain key assumptions (Note 21(a)).

If the key assumptions are higher or lower than the assumed rates, the effect on the carrying amount of the goodwill as at 31 December 2014 are as follows:

higher/(lower) than

assumedrate

reduction incarrying

amount ofgoodwill

% $’000

management services – singapore

Average revenue growth rate from 2016 to 2019 (0.5) 3,698

Terminal growth rate (0.5) 3,142

Pre-tax discount rate 0.5 3,498

property ownership

Budgeted net profit margin (1.0) 6,283

Pre-tax discount rate 1.0 5,930

Terminal yield 0.5 6,875

69


3. criticAl Accounting estimAtes AnD Assumptions (continued)

(d) estimation of provisions for onerous hospitality lease agreements

As at 31 December 2014, the carrying amounts of the provisions for onerous hospitality lease agreements are estimated based on a number of inputs which included the gross operating profit margin for each onerous lease agreement. If the actual gross operating profit margins decrease or increase by 1.0% from the estimates, the carrying amounts of the provisions will be $1,458,000 higher or $1,503,000 lower (2013: $2,146,000 higher or $1,567,000 lower).

4. sAles

group

2014 2013

$’000 $’000

Hospitality operations 192,962 80,349

Hospitality management fees and related fees received/receivable from:

− related parties (Note 32(a)) 16,061 15,723

− non-related parties 263 -

Sale of development properties 75,471 43,978

Sale of properties held for sale 18,816 9,909

Rental income 11,871 8,351

Management fees charged to a joint venture 93 259

315,537 158,569



5. expenses bY nAture

group

2014 2013

$’000 $’000

Advertising, promotion and marketing 3,532 5,065

Cost of development properties sold and properties held for sale 69,670 40,144

Foreseeable loss on a development property (Note 14(a)) - 459

Depreciation of property, plant and equipment (Note 20) 9,334 3,499

Directors’ fees 535 469

Employee compensation (Note 6) 64,295 27,463

Hospitality supplies and services 42,747 14,378

Hospitality management fees – joint venture 3,539 568

Support services paid/payable to:

− joint venture 8,889 1,201

− related parties (Note 32(a)) 4,300 4,369

Fees on audit services paid/payable to:

− auditor of the Company 431 389

− other auditors * 160 49

Fees on non-audit services paid/payable to auditor of the Company 133 1,437

Acquisition-related costs 1,261 15,478

Property tax and upkeep of properties 8,287 3,950

Amortisation of intangible assets (Note 21(b)) 3,781 2,243

Rental expense on operating leases

– related parties (Note 32(a)) 23,050 25,708

– non-related parties 24,504 4,125

Other expenses 9,986 7,045

Total cost of sales, distribution and marketing, administrative and other expenses 278,434 158,039

* Includes the network of member firms of PricewaterhouseCoopers International Limited (PwCIL).

Included in the Group’s rental expense on operating leases is contingent rent amounting to $17,903,000 (2013: $14,146,000) and amortisation of deferred income amounting to $5,301,000 (2013: $5,301,000).

71


6. emploYee compensAtion

group

2014 2013

$’000 $’000

Wages and salaries 59,791 25,142

Employer’s contribution to defined contribution plans, including Central Provident Fund 4,504 2,321

64,295 27,463

7. other income

group

2014 2013

$’000 $’000

Interest income

− Bank deposits 1,362 1,971

− Advances to joint ventures 1,848 669

Other miscellaneous income 686 459

3,896 3,099

8. other gAins – net

group

2014 2013

$’000 $’000

Impairment losses of:

− country club membership (59) -

− property, plant and equipment (Note 20) (781) -

Fair value gains on investment properties (Note 19) 12,578 14,700

Revaluation losses on property, plant and equipment (1,392) -

Net currency translation losses (6,694) (3,697)

(Loss)/gain on disposal of property, plant and equipment (18) 1

3,634 11,004



9. FinAnce expenses

group

2014 2013

$’000 $’000

Interest expense

− Bank borrowings 4,236 1,289

− Advances from non-controlling interest 1,327 204

5,563 1,493

Less: Borrowing costs capitalised in development properties and property, plant and equipment (1,242) (681)

Finance expenses recognised in profit or loss 4,321 812

10. income tAxes

(a) income tax expense/(credit)

group

2014 2013

$’000 $’000

Tax expense/(credit) attributable to profit is made up of:

− Profit for the financial year:

Current income tax

− Singapore 1,647 3,105

− Foreign 5,406 712

7,053 3,817

Deferred income tax (Note 25) 6,073 (4,549)

13,126 (732)

− (Over)/under provision in prior financial years:

Current income tax

– Singapore (843) 244

– Foreign 634 -

Deferred income tax (Note 25) 362 25

153 269

13,279 (463)

73


10. income tAxes (continued)

(a) income tax expense/(credit) (continued)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows:

group

2014 2013

$’000 $’000

Profit before tax 48,758 21,049

Share of results of:

− joint ventures, net of tax (5,797) (4,120)

− associated companies, net of tax (2,649) (3,108)

(8,446) (7,228)

Profit before tax and share of results of joint ventures and associated companies 40,312 13,821

Tax calculated at tax rate of 17% (2013: 17%) 6,853 2,349

Effects of:

− different tax rates in other countries 304 (4,070)

− expenses not deductible for tax purposes 7,150 11,715

− income not subject to tax (1,472) (4,368)

− statutory stepped income exemption (111) (77)

− deferred tax asset not recognised 148 246

− recognition of previously unrecognised tax losses and capital allowances (586) (6,930)

− unremitted profit of a joint venture 925 478

− tax incentives (85) (75)

− under provision of tax 153 269

Tax charge/(credit) 13,279 (463)

In the preceding financial year, the effect of different tax rates in other countries relates to the adjustments to expenses not deductible for tax purposes incurred by the Group’s foreign subsidiaries in countries with higher tax rates.



10. income tAxes (continued)

(b) current income tax liabilities

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Beginning of financial year 4,761 3,188 2,617 1,553

Currency translation differences (252) (23) - -

Acquisition of businesses (Note 34) - (81) - -

Income tax paid – net (3,834) (2,384) (2,095) (1,139)

Tax expense 7,053 3,817 - 1,900

(Over)/under provision in prior financial years (209) 244 (28) 303

End of financial year 7,519 4,761 494 2,617

(c) tax effects – other comprehensive income The tax charge or credit relating to each component of other comprehensive income, if any, is presented in the other

comprehensive income.

11. eArnings per shAre

Basic earnings per share (“EPS”) is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

group

2014 2013

Net profit attributable to equity holders of the Company ($’000) 35,498 29,385

Weighted average number of ordinary shares outstanding for basic earnings per share (’000) 395,521 386,183

Basic earnings per share (cents per share) 8.97 7.61

Diluted EPS was the same as basic EPS as there are no dilutive potential ordinary shares.

75


12. cAsh AnD cAsh equiVAlents

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Cash at bank and on hand 30,868 38,699 5,596 5,473

Short-term bank deposits 67,518 226,276 50,435 194,075

98,386 264,975 56,031 199,548

Included in cash and cash equivalents of the Group is the Group’s share of its joint operation’s bank balances and deposits amounting to $5,272,000 (2013: $8,848,000) held under the development project rules in Singapore and the use of which is also governed by these rules.

13. trADe AnD other receiVAbles

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

current

Trade receivables:

− related parties (Note 32(a)) 6,314 4,699 159 450

− non-related parties 15,241 15,803 1,832 2,312

Due from customers (Note 14(b)) 50,262 35,653 - -

71,817 56,155 1,991 2,762

Less: Allowance for impairment of receivables:

− related parties (Note 32(a)) - (92) - -

− non-related parties (98) - - -

71,719 56,063 1,991 2,762

Advances to a subsidiary - - 159,554 160,029

Deposits:

− related parties (Note 32(a)) 5,321 5,255 5,159 5,140

− non-related parties 31 37 9 9

Prepayments 1,318 2,333 91 90

Other receivables:

− non-controlling interest 1,221 1,145 - -

− related parties (Note 32(a)) 195 1,428 5 835

− non-related parties 1,571 1,017 194 296

9,657 11,215 165,012 166,399

81,376 67,278 167,003 169,161

The advances to a subsidiary by the Company and the other receivables from non-controlling interest and related parties by the Group and the Company, if any, are unsecured, repayable on demand and interest-free, except that the advances to a subsidiary by the Company of $154,812,000 (2013: $154,812,000) which is interest-bearing at a weighted average effective rate of 2.0% (2013: 2.4%) per annum. Included in the Group’s other receivables – non-related parties is an income tax recoverable of $814,000 (2013: Nil) from tax authorities.



13. trADe AnD other receiVAbles (continued)

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

non-current

Deposits – non-related parties 50 97 - -

Prepayments 432 457 264 280

Country club membership 228 228 228 228

Advances to:

− subsidiaries - - 529,814 364,286

− joint ventures 220,597 72,952 40,501 39,067

− associated company 862 862 - -

222,169 74,596 570,807 403,861

Less: Allowance for impairment of:

− country club membership (176) (117) (176) (117)

− advances to:

– subsidiaries - - (90,579) (122,537)

– associated company (862) (862) - -

(1,038) (979) (90,755) (122,654)

221,131 73,617 480,052 281,207

The non-current advances to joint ventures by the Group and the Company represent the advances provided to the joint ventures that are formed to develop the joint venture projects.

The non-current advances to subsidiaries, joint ventures and an associated company by the Group and the Company, if any, are unsecured, not expected to be repayable in the next twelve months and interest-free except as follows:

• advances to subsidiaries by the Company of $243,934,000 (2013: $114,026,000), which is interest-bearing at a weighted average effective rate of 1.4% (2013: 1.2%) per annum;

• advances to joint ventures of the Group of $214,244,000 (2013: $72,952,000), which is interest-bearing at a weighted average effective interest rate of 1.5% (2013: 1.3%) per annum; and

• advances to a joint venture of the Company of $39,752,000 (2013: $38,852,000), which is interest-bearing at a weighted average effective interest rate of 1.5% (2013: 1.2%) per annum.

The fair values of non-current other receivables approximate their carrying amounts.

77


14. DeVelopment properties

(a) unsold properties under development

This represents the Group’s share in a joint operation’s properties under development analysed as follows:

group

2014 2013

$’000 $’000

Freehold and leasehold land 37,032 38,118

Development costs 2,118 2,706

39,150 40,824

Less: Provision for foreseeable loss on a development property (Note 5) (459) (459)

38,691 40,365

(b) sold properties under development

This represents the Group’s share in a joint operation’s sold properties under development analysed as follows:

group

2014 2013

$’000 $’000

Aggregate costs incurred and profits recognised

− Leasehold land 53,262 52,176

− Development costs and attributable profits 74,271 31,271

127,533 83,447

Less: Progress billings (77,271) (47,794)

50,262 35,653

Presented as:

Due from customers (Note 13) 50,262 35,653

(c) Properties under development with carrying amounts of $38,100,000 (2013: $108,857,000) are provided as security for

bank borrowings (Note 23).

At the balance sheet date, the details of the development properties of the Group are as follows:

Brief description and location

Stage of completion

Expected date of

completionExisting

useSite area

(sm)Gross floor

area (sm)

Group’s effective interest

euHabitat, 186 – 332 Jalan Eunos

82% September 2015

Residential 41,261 64,736 20%

7 and 11 Bassein Road

Na Na Na 4,775 Na 30%



14. DeVelopment properties (continued)

(c) (continued)

On 29 January 2015, the Group sold its 30% interest in 7 and 11 Bassein Road to its joint operations partner for this development project, Transurban Properties Pte Ltd (“TPPL”), for a cash consideration of $38,100,000 which is the carrying amount at 31 December 2014 as well as the sale date; after taking into account the latest available valuation of the property. TPPL is a related party of the Company (Note 32(a)). Part of the proceeds will be used to repay bank borrowings of $19,500,000 and discharge the mortgage over the property that existed as at 31 December 2014.

15. properties helD For sAle

group

2014 2013

$’000 $’000

Medical suites 123,863 140,417

At the balance sheet date, the details of the Group’s properties held of sale are as follows:

Brief description and locationExisting

useSite area

(sm)Gross floor

area (sm)

Group’s effective interest

7 units of medical suites at Novena Medical Center, 10 Sinaran Drive Singapore

Medical Na 515 100%

32 units of medical suites at Novena Specialist Center, 8 Sinaran Drive Singapore

Medical Na 2,249 100%

16. inVestment in AssociAteD compAnies

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Equity investment at cost 696 696

Beginning of financial year 7,812 5,268

Share of:

− results 2,649 3,108

− movement in fair value reserve (61) (564)

Liquidation during the financial year (1,976) -

End of financial year 8,424 7,812

79


16. inVestment in AssociAteD compAnies (continued)

The details of the material associated company, FEO Hospitality Asset Management Pte Ltd (“FEOHAM”) are set out in Note 37. The summarised financial information for FEOHAM is set out below.

summarised balance sheet

As at 31 December

2014 2013

$’000 $’000

current assets 4,656 4,958

Includes:

− Cash and cash equivalents 1,498 1,500

current liabilities (3,382) (3,833)

non-current assets 17,474 9,924

net assets 18,748 11,049

summarised statement of comprehensive income

For the financial year ended

2014 2013

$’000 $’000

Sales 12,017 14,451

Expenses

Includes:

− Depreciation and amortisation (101) (99)

− Interest expense - (2)

profit before income tax 9,448 11,116

Income tax expense (1,565) (1,819)

net profit 7,883 9,297

other comprehensive loss, net of tax (184) (1,710)

total comprehensive income 7,699 7,587

The information above reflects the amounts included in the financial statements of FEOHAM and not the Group’s share of those amounts, adjusted where necessary by the Group when applying the equity method of accounting.

There are no contingent liabilities relating to the Group’s interest in FEOHAM.



16. inVestment in AssociAteD compAnies (continued)

A reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in FEOHAM:

2014 2013

$’000 $’000

Net assets at beginning of financial year 11,049 3,462

Profit for the financial year 7,883 9,297

Other comprehensive loss (184) (1,710)

net assets at end of financial year 18,748 11,049

Interest in FEOHAM (2014 and 2013: 33%) 6,187 3,646

Goodwill 343 343

carrying amount 6,530 3,989

Add:

carrying amount of individually immaterial associated companies 1,894 3,823

8,424 7,812

17. inVestments in Joint Ventures

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Equity investment at cost 300 300


Additions 71,078 146,992

Share of results 5,797 4,120

Share of movements in:

− asset revaluation reserve (Note 27(i)) 7,978 -

− currency translation reserve (Note 27(ii)) 294 (201)

− hedging reserve (Note 27(iv)) (1,057) (225)

Capital reduction (113,009) -

Dividend received (2,881) -

Currency translation differences (9,260) (1,078)


During the financial year, the Group

(a) made a capital contribution of $35,909,000 (or A$31,731,000) for an additional 5.5% interest in the total issued securities in Toga Hotel Holdings Unit Trust (“Toga JV”);

(b) acquired a 50% interest in eight joint ventures which owned and operated three hotels in Germany and one hotel in Denmark for $35,169,000 (or EUR21,020,000); and

(c) reduced its investment in Orwin Development Limited by $113,009,000 through reduction of share capital.

81


17. inVestments in Joint Ventures (continued)

The summarised financial information for the Group’s material joint ventures for the current and preceding years is set out below. The details of the joint ventures are set out in Note 37.

summarised consolidated balance sheet

toga hotel holdingsunit trust

orwin Developmentlimited

2014 2013 2014 2013

$’000 $’000 $’000 $’000

current assets 122,557 69,823 31,695 71,861

Includes:

− Cash and cash equivalents 29,538 37,716 31,690 55,867

current liabilities (103,249) (171,723) (24,180) (43,775)

Includes:

– Borrowings (37,217) (115,589) - -

non-current assets 558,669 524,475 24,788 194,937

non-current liabilities (149,682) (35,273) - (2,021)

Includes:

– Borrowings (117,462) - - -

net assets 428,295 387,302 32,303 221,002

summarised consolidated statement of comprehensive income



For the financial year ended For the financial year ended

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Sales 366,747 148,659 - -

Interest income 242 369 89 106

Expenses

Includes:

− Depreciation and amortisation (11,726) (4,173) - -

− Interest expense (7,002) (2,166) - -

profit before income tax 19,465 14,372 164 141

Income tax (expense)/credit (6,311) (2,576) (514) 562

net profit/(loss) 13,154 11,796 (350) 703

other comprehensive income/(loss), net of tax 17,961 (1,112) - -

total comprehensive income/(loss) 31,115 10,684 (350) 703

Dividend received from joint ventures 2,881 - - - The information above reflects the amounts included in the financial statements of the joint ventures, and not the Group’s share

of those amounts, adjusted where necessary by the Group when applying the equity method of accounting.

There are no contingent liabilities relating to the Group’s interest in the joint ventures.



17. inVestments in Joint Ventures (continued)

A reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in the joint ventures:



2014 2013 2014 2013

$’000 $’000 $’000 $’000

Net assets at beginning of financial year 387,302 - 221,002 220,299

Subscription during the financial year 34,358 376,864 - -

Capital reduction - - (188,349) -

Profit/(Loss) for the financial year 13,154 11,796 (350) 703

Other comprehensive income/(loss) 17,961 (1,112) - -

Dividend paid (7,710) - - -

Currency translation differences (16,771) (246) - -

net assets at end of financial year 428,294 387,302 32,303 221,002

Interest in Toga JV (2014: 43%, 2013: 37%); Orwin (2014 and 2013: 60%) 181,760 143,752 19,382 132,601

Goodwill 5,814 5,814 - -

carrying amount 187,574 149,566 19,382 132,601

The Group’s share of aggregate carrying amount of other immaterial joint ventures is $34,151,000 (2013: Nil).

The Group’s share of unrecognised losses of its joint ventures for the year and cumulatively amounted to $2,584,000 (2013: $2,081,000) and $4,665,000 (2013: $2,081,000) respectively.

18. inVestments in subsiDiAries

company

2014 2013

$’000 $’000

Equity investments at cost 518,817 563,207

Less: Allowance for impairment of equity investments (9,663) (9,675)

509,154 553,532

83

Notes to the FiNaNcial statemeNtsFor the financial year ended 31 December 2014

18. Investments In subsIdIarIes (continued)

The details of the subsidiary with material non-controlling interest, Far East Hospitality Holdings Pte. Ltd., are set out in Note 37. The summarised consolidated financial information for Far East Hospitality Holdings Pte. Ltd. and its subsidiaries, before inter-company eliminations with other subsidiaries within the Group, is set out below.

summarised consolidated balance sheet

as at 31 december

2014 2013

$’000 $’000

assets

Current assets 64,323 79,254

Non-current assets 584,887 506,742

Total assets 649,210 585,996

Liabilities

Current liabilities (326,896) (272,285)

Non-current liabilities (282,921) (282,237)

Total liabilities (609,817) (554,522)

net assets 39,393 31,474

Carrying value of non-controlling interest at 30% (2013: 30%) 11,818 9,442

summarised consolidated statement of comprehensive income


2014 2013

$’000 $’000

sales 164,583 28,576

Profit/(loss) before income tax 9,823 (25,107)

Income tax expense (9,886) (1,136)

net loss (63) (26,243)

Other comprehensive income/(loss), net of tax 7,983 (7,092)

total comprehensive income/(loss) 7,920 (33,335)

total comprehensive income/(loss) attributable to non-controlling interest 2,376 (10,001)

summarised consolidated statement of cash flows


2014 2013

$’000 $’000

Operating cash inflows 9,613 2,339

Investing cash outflows (71,322) (202,935)

Financing cash inflows 42,887 250,549

Total cash (outflows)/inflows (18,822) 49,953

There were no changes during the financial year in the Group’s ownership interest in its significant subsidiaries.



19. inVestment properties

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000


Fair value gains recognised in profit or loss (Note 8) 12,578 14,700 3,857 4,921

Acquisition of businesses (Note 34) - 26,447 - -

Currency translation differences (1,455) (1,073) - -

End of financial year 315,598 304,475 120,066 116,209

Investment properties of the Group with carrying amounts of $32,484,000 (2013: Nil) are provided as security for bank borrowings (Note 23).

The investment properties are leased to non-related parties and related parties (Note 32(a)) under operating leases. The following amounts are recognised in profit or loss:

group

2014 2013

$’000 $’000

Rental income 11,124 7,763

Direct operating expenses arising from investment properties that generate rental income (3,890) (2,068)

At the balance sheet date, the details of the Group’s investment properties are as follows:

Brief description and location Existing use Tenure

in singapore

Shops and offices (land only) at Orchard Parade Hotel, 1 Tanglin Road Shops and offices Freehold and leasehold

4 office units at Tanglin Shopping Centre, 19 Tanglin Road Offices Freehold

37 units of medical suites at Novena Medical Center, 10 Sinaran Drive Medical Leasehold with 99 yearslease expiring on27 August 2101

10 units of medical suites at Novena Specialist Center, 8 Sinaran Drive Medical Leasehold with 99 yearslease expiring on

22 April 2106

in Australia

Shops at Rendezvous Hotel Perth Scarborough, Western Australia Shops Freehold

85


19. inVestment properties (continued)

Valuation processes, techniques and inputs for level 3 fair values

The Group engages external, independent and qualified valuers to determine the fair value of the Group’s investment properties at the end of the financial year based on the properties’ highest and best use. The following table presents the valuation techniques and key inputs that were used to determine the fair value which is categorised under Level 3 of the fair value hierarchy.

DescriptionFair value as at 31 December

Valuation technique(s)

Unobservable input(s) and range

Relationship of unobservable inputs

to fair value

2014 2013

$’000 $’000

Freehold and leasehold land – Singapore

108,295 104,438 Sales comparison

Pre-adjusted comparable sales price – $8,585 to $11,763 (2013: $6,558

to $7,228) psf

The higher the comparable sales price, the higher the fair value

Office units – Singapore



to $2,835) psf


Medical suites – Singapore


Pre-adjusted comparable sales price $4,266 to

$6,105 (2013: $3,796 to $4,600) psf


Shops – Australia 32,485 25,374 Discounted cash flow

Discount rate – 9.5% (2013: 10.0%)

The lower the discount rate, the higher the value

Income capitalisation

Capitalisation rate – 8.0% (2013: 8.5%)

The lower the capitalisation rate, the higher the fair value

315,598 304,475



20. propertY, plAnt AnD equipment

Freehold and

leasehold land

$’000

Freehold and

leasehold buildings

$’000

Plant, equipment,

furniture and fittings

$’000

Construction-in-progress

$’000

Motor vehicles

$’000

Other assets$’000

Total$’000

group – 2014

Cost or valuation

Beginning of financial year

Cost - - 54,513 22,967 1,032 5,125 83,637

Valuation 420,356 121,802 - - - - 542,158

420,356 121,802 54,513 22,967 1,032 5,125 625,795

Currency translation differences (1,904) (4,892) (489) (474) - (78) (7,837)

Additions - - 2,330 13,696 472 30 16,528

Disposals - - (12) - (440) - (452)

Revaluation adjustments (7,622) 8,790 - - - - 1,168

End of financial year 410,830 125,700 56,342 36,189 1,064 5,077 635,202

Representing:

Cost - - 56,342 36,189 1,064 5,077 98,672

Valuation 410,830 125,700 - - - - 536,530

410,830 125,700 56,342 36,189 1,064 5,077 635,202

Accumulated depreciation and impairment losses

Beginning of financial year - - 34,757 - 145 2,689 37,591

Currency translation differences - (224) (156) - - (25) (405)

Depreciation charge (Note 5) - 4,766 3,814 - 109 645 9,334

Impairment charge (Note 8) - - 781 - - - 781

Disposals - - (12) - (82) - (94)

Revaluation adjustments - (4,542) - - - - (4,542)

End of financial year - - 39,184 - 172 3,309 42,665

Net book value

end of financial year 410,830 125,700 17,158 36,189 892 1,768 592,537

87


20. propertY, plAnt AnD equipment (continued)

Freehold and

leasehold land

$’000

Freehold and

leasehold buildings

$’000

Plant, equipment,


$’000


$’000

Motor vehicles

$’000

Other assets$’000

Total$’000

Group – 2013

Cost or valuation


Cost - - 40,864 8,737 1,083 3,190 53,874

Valuation 373,590 - - - - - 373,590

373,590 - 40,864 8,737 1,083 3,190 427,464

Currency translation differences (2,068) (5,127) (591) (297) - (85) (8,168)

Acquisition of businesses (Note 34) 43,255 126,605 12,936 240 - 2,000 185,036

Additions - - 996 14,629 - 32 15,657

Disposals - - (14) - (48) - (62)

Transfers - - 322 (342) (3) (12) (35)

Revaluation adjustments 5,579 324 - - - - 5,903

End of financial year 420,356 121,802 54,513 22,967 1,032 5,125 625,795

Representing:

Cost - - 54,513 22,967 1,032 5,125 83,637

Valuation 420,356 121,802 - - - - 542,158

420,356 121,802 54,513 22,967 1,032 5,125 625,795

Accumulated depreciation and impairment losses

Beginning of financial year - - 32,635 - 85 2,205 34,925

Currency translation differences - (39) (4) - - (1) (44)

Depreciation charge (Note 5) - 766 2,140 - 108 485 3,499

Disposals - - (14) - (48) - (62)

Revaluation adjustments - (727) - - - - (727)

End of financial year - - 34,757 - 145 2,689 37,591

Net book value

end of financial year 420,356 121,802 19,756 22,967 887 2,436 588,204




Freehold and

leasehold land

$’000

Plant, equipment,


$’000


$’000

Motor vehicles

$’000

Other assets$’000

Total$’000

company – 2014

Cost or valuation


Cost - 27,691 - 223 1,778 29,692

Valuation 367,263 - - - - 367,263

367,263 27,691 - 223 1,778 396,955

Additions - 324 - 472 - 796

Disposals - (7) - (227) - (234)

Revaluation adjustments (10,057) - - - - (10,057)

End of financial year 357,206 28,008 - 468 1,778 387,460

Representing:

Cost - 28,008 - 468 1,778 30,254

Valuation 357,206 - - - - 357,206

357,206 28,008 - 468 1,778 387,460

Accumulated depreciation

Beginning of financial year - 23,471 - 39 1,772 25,282

Depreciation charge - 1,026 - 45 2 1,073

Disposals - (3) - (48) - (51)

End of financial year - 24,494 - 36 1,774 26,304

Net book value

end of financial year 357,206 3,514 - 432 4 361,156

89



Freehold and

leasehold land

$’000

Plant, equipment,


$’000


$’000

Motor vehicles

$’000

Other assets$’000

Total$’000

Company – 2013

Cost or valuation


Cost - 27,127 114 271 1,768 29,280

Valuation 364,000 - - - - 364,000

364,000 27,127 114 271 1,768 393,280

Additions - 393 61 - 10 464

Disposals - (4) - (48) - (52)

Transfers - 175 (175) - - -

Revaluation adjustments 3,263 - - - - 3,263

End of financial year 367,263 27,691 - 223 1,778 396,955

Representing:

Cost - 27,691 - 223 1,778 29,692

Valuation 367,263 - - - - 367,263

367,263 27,691 - 223 1,778 396,955

Accumulated depreciation

Beginning of financial year - 22,423 - 64 1,768 24,255

Depreciation charge - 1,052 - 23 4 1,079

Disposals - (4) - (48) - (52)

End of financial year - 23,471 - 39 1,772 25,282

Net book value

end of financial year 367,263 4,220 - 184 6 371,673

Property, plant and equipment of the Group with carrying amounts $210,162,000 (2013: $126,924,000) are provided as security for bank borrowings (Note 23).

If the freehold and leasehold land and buildings of the Group and the Company stated at valuation were included in the financial statements at cost less accumulated depreciation, their net book values would have been $162,577,000 (2013: $173,713,000) and $2,183,000 (2013: $2,183,000) respectively.

Property, plant and equipment of the Group which an impairment charge of $781,000 (2013: Nil) was recognised belongs to the hospitality operations – Australia and New Zealand operating segment (Note 33).




Valuation processes, techniques and inputs for level 3 fair values The Group engages external, independent and qualified valuers to determine the fair value of the Group’s property, plant and

equipment, on a triennial basis and whenever their carrying amounts are likely to differ materially from their revalued amounts, based on the properties’ highest and best use. The following table presents the valuation techniques and key inputs that were used to determine the fair value which is categorised under Level 3 of the fair value hierarchy.

DescriptionFair value as at 31 December

Valuation technique(s)

Unobservable input(s) and range

Relationship of unobservable inputs

to fair value

2014 2013

$’000 $’000

Freehold and leasehold land – Singapore



to $7,296) psf


Freehold land – Malaysia


Pre-adjusted comparable sales price – $833 to $1,418 (2013: $655

to $1,113) psf

The higher thecomparable salesprice, the higher

the fair value

Freehold land and freehold and leasehold buildings – Australia

167,604 163,316 Discounted cash flow

Discount rate – 10.5% to 11.0% (2013: 11.0%

to 11.5%)

The lower the discount rate, the

higher the fair value

Income capitalisation

Capitalisation rate – 8.3% to 8.8%

(2013: 8.5% to 9.5%)

The lower the capitalisation rate, the higher the fair value

536,530 542,158

91


21. intAngible Assets

group

2014 2013

$’000 $’000

Goodwill arising from acquisition of hospitality businesses (Note (a)) 58,271 58,891

Hospitality lease and management agreements (Note (b)) 93,235 97,016

151,506 155,907

(a) goodwill arising from acquisition of hospitality businesses

group

2014 2013

$’000 $’000


Acquisition of businesses (Note 34) - 18,241

Currency translation differences (620) (651)


impairment tests for goodwill

Goodwill is allocated to the Group’s hospitality CGUs identified according to the business segments as follows:

group

2014 2013

$’000 $’000

Management services – Singapore (Note (i)) 42,155 42,155

Property ownership (Note (ii)) 16,116 16,736

58,271 58,891

(i) Management services – Singapore

The recoverable amount as at 31 December 2014 was determined based on value-in-use calculations. Cash flow projections used in the value-in-use calculations were based on financial budgets approved by management for the next financial year (2015) and extrapolated using the estimated average revenue growth rates stated below. The pre-tax discount rate and terminal growth rate used reflected specific risks relating to the CGU. The key assumptions used are as follows:

2014

Average revenue growth rate from 2016 to 2019 14.1%

Terminal growth rate 3.0%

Pre-tax discount rate 12.0%



21. intAngible Assets (continued)

(a) goodwill arising from acquisition of hospitality businesses (continued)

(i) Management services – Singapore (continued)

The recoverable amount exceeded its carrying amount and the allocated goodwill was not impaired.

The recoverable amount as at 31 December 2013 was determined based on fair value less cost to sell which was estimated to be similar to the transacted price for the Business Transfer as described in Note 34. The recoverable amount exceeded the carrying amount and the allocated goodwill was not impaired.

(ii) Property ownership

The recoverable amount as at 31 December 2014 and 2013 were determined based on value-in-use calculations. Cash flow projections used in the value-in-use calculations were based on financial budgets approved by management for the next financial year and extrapolated using the budgeted net profit margin stated below. The pre-tax discount rate and terminal yield used reflected specific risks relating to the CGU. The key assumptions used are as follows:

2014 2013

Budgeted net profit margin 37.0% 33.2%

Pre-tax discount rate 10.4% 11.0%

Terminal yield 8.5% 9.0%

The recoverable amount exceeded its carrying amount and the allocated goodwill was not impaired.

(b) hospitality lease and management agreements

group

2014 2013

$’000 $’000

Cost




Accumulated amortisation

Beginning of financial year (3,219) (976)

Amortisation charge (Note 5) included within “Cost of sales” in profit or loss (3,781) (2,243)

End of financial year (7,000) (3,219)

Net book value 93,235 97,016

93


22. trADe AnD other pAYAbles

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

current

Trade payables:


− non-related parties 9,301 15,055 974 2,679

14,081 20,240 3,776 5,509

Deferred income:


− non-related parties 1,285 724 - -

8,087 7,526 6,802 6,802

Other payables:

− joint venture 15,608 9,428 - -

− related parties (Note 32(a)) - 4 - -

− non-controlling interest - 1,225 - -

− non-related parties 398 410 - -

16,006 11,067 - -

Advances from:

− subsidiaries - - - 46,147

− associated company - 1,963 - -


66,507 68,515 - 46,147

Accrual for operating expenses 18,871 29,452 4,781 7,614

Deposits received 3,339 3,474 265 348

Interest payable 517 303 - -

22,727 33,229 5,046 7,962

127,408 140,577 15,624 66,420

Other payables to joint venture, other related parties and non-controlling interest of the Group are unsecured, repayable on demand and interest-free, except for the advances from non-controlling interest of $66,348,000 (2013: $66,348,000) bear interest at a weighted average effective interest rate of 2.0% (2013: 2.0%) per annum.



22. trADe AnD other pAYAbles (continued)

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

non-current

Deferred income – related parties (Note 32(a)) 317,091 323,888 317,091 323,888

Other payables – non-related parties 19 110 - -

Deposits received 1,289 800 - 117

Advances from:

− subsidiaries - - 288,204 251,840

– joint venture 14,873 116,962 - -

− associated company 1,503 1,503 - -


406,687 503,265 605,295 575,845

Deferred income from related parties refers to the unamortised portion of the proceeds from Far East Hospitality Trust for the Company’s grant of a 50-year leasehold interest in the freehold and leasehold land of Orchard Parade Hotel to Far East Hospitality Trust.

The non-current advances from subsidiaries to the Company and the advances from joint venture, associated company and non-controlling interest of the Group are unsecured, interest-free and not repayable in the next 12 months except for the advances from non-controlling interest.

Advances from non-controlling interest are repayable at its nominal value, or convertible to shares of the subsidiary in whole or in part and in the same proportion as a similar loan from the Company to the same subsidiary, such that the Company’s share of equity interest in the subsidiary does not change, at the rate of one share per $1 nominal value of the loan, upon the unanimous approval of the Company and the non-controlling interest. This advance is deemed as part of the non-controlling interest’s net investment in the subsidiary as the non-controlling interest has no intention to demand repayment in the foreseeable future. These advances from non-controlling interest are not expected to be repayable within the next 12 months.

The fair values of non-current trade and other payables of the Group and the Company approximate their carrying amounts.

95


23. borroWings

group

2014 2013

$’000 $’000

Bank borrowings:

− current 86,264 -

− non-current 19,476 89,415

105,740 89,415

The non-current bank borrowings included the Group’s share of joint operations’ bank borrowings of $19,476,000 (2013: $23,629,000) which are secured over the Group’s share of joint operations’ development properties (Note 14). The remaining bank borrowings of the Group are secured over an investment property (Note 19) and certain property, plant and equipment (Note 20).

The bank borrowings of the Group are at variable rates and will be contractually repriced between one to three months from the balance sheet date.

The fair values of non-current borrowings of the Group approximate their carrying amounts.

24. proVisions

group

2014 2013

$’000 $’000

Onerous hospitality lease agreements:

− current 5,923 8,268

− non-current 12,706 14,982

18,629 23,250

A provision is recognised at the balance sheet date for the unavoidable costs of meeting the obligations under the hospitality lease agreement which exceeds the economic benefits expected to be received over the remaining contractual term.

The movements in the provisions for onerous hospitality lease agreements are as follows:

group

2014 2013

$’000 $’000

Beginning of financial year 23,250 -


Provision made 3,685 -

Provision utilised (8,104) (1,517)

Currency translation differences (202) 61




25. DeFerreD income tAxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheet as follows:

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Deferred income tax assets

− To be recovered within one year 1,307 - - -

− To be recovered after one year 106 4,765 - -

1,413 4,765 - -

Deferred income tax liabilities

− To be settled within one year 670 693 146 130

− To be settled after one year 26,811 16,678 402 518

27,481 17,371 548 648

Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised tax losses of approximately $41,109,000 (2013: $43,616,000) which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses and capital allowances in their respective countries of incorporation. These tax losses have no expiry date.

97


25. DeFerreD income tAxes (continued)

The movements in deferred income tax liabilities and assets (prior to offsetting of balances within the same tax jurisdiction) are as follows:

Deferred income tax liabilities – group

Acceleratedtax

depreciation$’000

Revaluationgains – net

$’000

Recognitionof profits onpercentage

of completion

$’000Other$’000

Total$’000

group – 2014

Beginning of financial year 16,578 315 2,300 478 19,671

(Credited)/charged to:

– profit or loss (634) 2,570 3,799 924 6,659

– other comprehensive income (Note 27(i)) - 7,350 - - 7,350

(Over)/under provision in prior financial years - - (107) 255 148

Currency translation differences - (258) - (94) (352)

end of financial year 15,944 9,977 5,992 1,563 33,476

Group – 2013

Beginning of financial year 16,211 - - - 16,211

(Credited)/charged to:

– profit or loss (397) - 2,300 478 2,381

– other comprehensive income (Note 27(i)) - 315 - - 315

Acquisition of businesses (Note 34) 739 - - - 739

Under provision in prior financial years 25 - - - 25

end of financial year 16,578 315 2,300 478 19,671



25. DeFerreD income tAxes (continued)

Deferred income tax assets – group

Tax losses$’000

Other $’000

Total$’000

group – 2014

Beginning of financial year (6,930) (135) (7,065)

Credited to profit or loss (586) - (586)

Over provision in prior financial years 214 - 214

Currency translation differences - 29 29

end of financial year (7,302) (106) (7,408)

Group – 2013

Beginning of financial year - - -

Acquired during the year - (141) (141)

Credited to profit or loss (6,930) - (6,930)

Currency translation differences - 6 6

end of financial year (6,930) (135) (7,065)

Deferred income tax liabilities – company

2014 2013

$’000 $’000

Accelerated tax depreciation

Beginning of financial year 648 726

Credited to profit or loss (100) (78)

end of financial year 548 648

26. shAre cApitAl

group and company

number of shares Amount

2014 2013 2014 2013

‘000 ‘000 $’000 $’000


Shares issued in-lieu of dividends 10,675 12,769 19,001 26,004


All issued ordinary shares are fully paid and there is no par value for these ordinary shares.

99


27. reVAluAtion AnD other reserVes

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Capital reserve 10,557 10,557 - -

Asset revaluation reserve 345,023 342,516 329,629 339,686

Currency translation reserve (14,055) (7,901) - -

Fair value reserve (625) (564) - -

Hedging reserve (897) (157) - -

340,003 344,451 329,629 339,686

Capital reserve of the Group represents the difference between the non-controlling interest’s share of the carrying amount of the business and the fair value of the consideration received by the Group when it transferred 30% out of the 100% held interest in the hospitality management business to the non-controlling interest in the preceding financial year (Note 34).

The movements for the other categories of reserves are as follows:

(i) Asset revaluation reserve

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000


Revaluation gains/(losses) (Note 20) 7,102 6,630 (10,057) 3,263

Share of joint venture’s reserve (Note 17) 7,978 - - -

Tax charge relating to revaluation gains (Note 25)

– joint venture (2,439) - - -

– subsidiary (4,911) (315) - -

Less: Non-controlling interest (5,223) (222) - -


(ii) Currency translation reserve

group

2014 2013

$’000 $’000

Beginning of financial year (7,901) (2,238)

Net currency translation differences of financial statements of foreign subsidiaries and joint ventures 2,316 1,032

Net currency translation differences of advances designated as net investments in subsidiaries (11,275) (8,776)

Share of joint venture’s reserve (Note 17) 294 (201)

Less: Non-controlling interest 2,511 2,282

(14,055) (7,901)



27. reVAluAtion AnD other reserVes (continued)

(iii) Fair value reserve

group

2014 2013

$’000 $’000

Beginning of financial year (564) -

Share of associated company’s reserve (Note 16) (61) (564)

End of financial year (625) (564)

(iv) Hedging reserve

group

2014 2013

$’000 $’000

Beginning of financial year (157) -

Fair value losses - 5,814

Reclassification to investment in joint ventures (Note 17) - (5,814)

Share of joint venture's reserve (Note 17) (1,057) (225)

Less: Non-controlling interest 317 68

End of financial year (897) (157)

Revaluation and other reserves are non-distributable.

28. retAineD proFits

Retained profits of the Group are distributable except for the accumulated retained profits from the share of results of joint ventures and associated companies amounting to $36,721,000 (2013: $29,802,000).

The movements for the retained profits of the Company are as follows:

company

2014 2013

$’000 $’000


Shares issued in-lieu of dividends (Note 29) (19,001) (16,140)

Dividends paid to shareholders in cash (Note 29) (4,392) (6,807)

Net profit 40,147 8,299


101


29. DiViDenDs

company

2014 2013

$’000 $’000

ordinary dividends paid

Final dividend paid in respect of the previous financial year of 6 cents (2013: 6 cents) using

− new shares issued 19,001 16,140

− cash 4,392 6,807

23,393 22,947

At the Annual General Meeting on 22 April 2015, a final dividend of 6 cents per share amounting to a total of $24,035,000 will be recommended. These financial statements do not reflect this dividend, which will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 December 2015.

30. commitments

(a) capital commitments

Capital expenditures contracted for at the balance sheet date but not recognised in the financial statements are as follows:

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Development properties 7,055 26,469 - -

Investment in joint ventures 76,303 97,112 - -

Property, plant and equipment 5,128 13,310 793 -

88,486 136,891 793 -

(b) operating lease commitments – where the group is a lessee

The Group and the Company lease hotels, serviced residences and offices from related parties and non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows:



30. commitments (continued)

(b) operating lease commitments – where the group is a lessee (continued)

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Not later than one year


− non-related parties 16,862 16,541 - -

34,766 34,308 10,505 10,340

Between one and five years



77,643 87,326 40,284 40,000

Later than five years



217,360 236,551 126,521 136,521

329,769 358,185 177,310 186,861

Included in the above are commitments of the Group under non-cancellable lease rentals that relate to the fixed portion over the remaining tenure of the initial lease term due to related parties and non-related parties. In addition to the fixed portion, contingent rent determined based on a percentage of gross operating revenue and gross operating profits of these properties have also been committed.

(c) operating lease commitments – where the group is a lessor

The Group and Company lease out investment properties to related-parties and non-related parties under non-cancellable operating leases. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease receivables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as receivables, are as follows:

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Not later than one year

– related parties (Note 32(a)) 117 338 117 337

– non-related parties 8,501 6,077 88 129

8,618 6,415 205 466

Between one and five years

– related parties (Note 32(a)) - 117 - 117

– non-related parties 14,336 10,153 - 88

14,336 10,270 - 205

Later than five years

– non-related parties 13,948 944 - -

36,902 17,629 205 671

103


31. FinAnciAl risk mAnAgement

The Group’s activities expose it to market risk (including interest rate risk and currency risk), credit risk and liquidity risk. The Group’s overall risk management objective is to effectively manage these risks and minimise potential adverse effects on the financial performance of the Group. Financial risk management is carried out by a team within the management of the Group.

(a) market risk

(i) Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing assets other than fixed deposits with banks, the Group’s income is substantially independent of changes in market interest rates.

The Group’s exposure to cash flow interest rate risks arises mainly from variable-rate borrowings (Note 23). The Company’s exposure to cash flow interest rate risks arises mainly from variable-rate borrowings and advances from/to subsidiaries at variable rates. The Group’s policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure.

The borrowings of the Group at variable rates are mainly denominated in Singapore Dollars (“SGD”) and Australian

Dollars (“AUD”). If the SGD interest rates had increased/decreased by 1.0% (2013: 1.8%) and AUD interest rates had increased/ decreased by 1.0% (2013: 1.8%) with all other variables including tax rate being held constant, the profit after tax of the Group would have been lower/higher by $162,000 (2013: $291,000) and $392,000 (2013: $593,000) respectively as a result of higher/lower interest expense on these borrowings.

(ii) Currency risk

The Group operates predominantly in Singapore, Australia, Malaysia and New Zealand. The entities within the Group transact in currencies other than their respective functional currencies (“foreign currencies”). Currency risk arises within entities in the Group when transactions are denominated in foreign currencies such as the Australian Dollar (“AUD”), Singapore Dollar (“SGD”) and Malaysian Ringgit (“MYR”). Where such currency risk becomes significant, the Group considers the use of currency swaps and forwards to manage the risk.

In addition, the Group is exposed to currency translation risk on the net assets in foreign operations. Currency exposure to the net assets of the Group’s foreign operations in Australia and Malaysia are managed through borrowings denominated in the relevant foreign currencies.



31. FinAnciAl risk mAnAgement (continued)

(a) market risk (continued)

(ii) Currency risk (continued)

The Group’s currency exposure based on the information provided to key management is as follows:

SGD AUD MYR Other Total

$’000 $’000 $’000 $’000 $’000

At 31 December 2014

Financial assets

Cash and cash equivalents 79,887 17,169 19 1,311 98,386

Trade and other receivables 283,042 14,394 8 2,447 299,891

Intra-group receivables 159,542 43,954 - 66,171 269,667

522,471 75,517 27 69,929 667,944

Financial liabilities

Borrowings (19,477) (56,018) (30,245) - (105,740)

Trade and other payables (180,774) (23,311) (2,074) (2,758) (208,917)

Intra-group payables (159,542) (43,954) - (66,171) (269,667)

(359,793) (123,283) (32,319) (68,929) (584,324)

net financial assets/(liabilities) 162,678 (47,766) (32,292) 1,000 83,620

Less: Net financial assets/(liabilities) denominated in the respective entities’ functional currencies (322,252) 48,845 32,292 3,225 (237,890)

net currency exposure (159,574) 1,079 - 4,225 (154,270)

105



(a) market risk (continued)

(ii) Currency risk (continued)

SGD AUD MYR Other Total

$’000 $’000 $’000 $’000 $’000

At 31 December 2013

Financial assets

Cash and cash equivalents 239,024 24,513 18 1,420 264,975

Trade and other receivables 125,481 10,251 32 2,230 137,994

Intra-group receivables 156,385 11,678 - - 168,063

520,890 46,442 50 3,650 571,032

Financial liabilities

Borrowings (23,568) (47,079) (18,768) - (89,415)

Trade and other payables (272,833) (32,260) (3,233) (4,102) (312,428)

Intra-group payables (156,385) (11,678) - - (168,063)

(452,786) (91,017) (22,001) (4,102) (569,906)

net financial assets/(liabilities) 68,104 (44,575) (21,951) (452) 1,126

Less: Net financial assets/ (liabilities) denominated in the respective entities’ functional currencies (224,781) 45,836 21,951 766 (156,228)

net currency exposure (156,677) 1,261 - 314 (155,102)

If the AUD strengthened/weakened against the SGD by 5% (2013: 5%) with all other variables including tax rate being held constant, the Group’s profit after tax for the financial year would have been $7,925,000 (2013: $7,771,000) higher/lower. The Company’s business is not exposed to any significant foreign exchange risk as the majority of its financial assets and liabilities are denominated in Singapore Dollars.

For the financial year ended 31 December 2014, the Group’s financial assets and liabilities denominated in other currencies include $62,608,000 of intra-group receivables and payables denominated in EUR.

(b) credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The major classes of financial assets of the Group and of the Company are bank deposits, trade receivables, advances to joint venture and deposits. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history and/or requiring deposits to be placed with the Group prior to provision of certain of its services. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties.

The Group has no significant concentrations of credit risk and has in place credit policies and procedures to ensure on-going credit evaluation and active account monitoring.

As the Group and the Company do not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. In addition, the Company has off-balance sheet exposure to credit risk as follows:




(b) credit risk (continued)

company

2014 2013

$’000 $’000

Corporate guarantees provided to banks on banking facilities of subsidiaries and joint ventures 52,369 56,868

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with reputable banks. Trade and other receivables, advances to joint ventures and deposits that are neither past due nor impaired are substantially companies with a good collection track record with the Group.

(ii) Financial assets that are past due and/or impaired

The age analysis of trade receivables past due but not impaired is as follows:

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Past due 0 to 2 months 4,816 5,236 498 717

Past due 2 to 4 months 545 357 18 6

Past due over 4 months - 144 - -

5,361 5,737 516 723

The carrying amount of trade receivables individually determined to be impaired and the movement in the related allowance for impairment are as follows:

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Gross amount 98 92 - -

Less: Allowance for impairment losses (98) (92) - -

- - - -

Beginning of financial year 92 - - -

Allowance written back (92) - - -

Allowance made 98 109 - -

Allowance utilised - (17) - -

End of financial year 98 92 - -

The impaired trade receivables arise mainly from sales to customers with significant delay in payments.

107



(c) liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, as well as the availability of funding through an adequate amount of committed credit facilities. At the balance sheet date, assets held by the Group and the Company for managing liquidity risk included cash and short-term deposits as disclosed in Note 12.

The Group and the Company manage the liquidity risk by maintaining sufficient cash to meet the normal operating commitments and having an adequate amount of committed credit facilities.

The table below analyses non-derivative financial liabilities of the Group and the Company into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Less than1 year

Between1 and 2

years

Between2 and 5

yearsOver

5 years

$’000 $’000 $’000 $’000

group –

At 31 December 2014

Trade and other payables 119,321 17,686 - 71,910

Borrowings 88,923 19,569 - -

208,244 37,255 - 71,910

At 31 December 2013

Trade and other payables 133,051 118,853 524 60,000

Borrowings 5,010 90,058 - -

138,061 208,911 524 60,000

company –

At 31 December 2014

Trade and other payables 8,822 288,204 - -

Financial guarantees for borrowings of subsidiaries and joint ventures 52,369 - - -

61,191 288,204 - -

At 31 December 2013

Trade and other payables 59,618 251,840 117 -

Financial guarantees for borrowings of subsidiaries and joint ventures 56,868 - - -

116,486 251,840 117 -




(d) capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.

Management monitors capital based on a gearing ratio. Consistent with how management monitors capital, the gearing ratio is calculated as total borrowings divided by total equity.

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Total borrowings 105,740 89,415 - -

Total equity 1,181,234 1,152,200 1,072,533 1,046,835

gearing ratio (%) 9% 8% - -

The Group is in compliance with all externally imposed capital requirements for the financial years ended 31 December 2014 and 2013. The Company is not subject to any externally imposed capital requirements for the financial years ended 31 December 2014 and 2013.

(e) Financial instruments by category

The carrying amount of the different categories of financial instruments is as disclosed on the face of the balance sheet, except for the following:

group company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Loans and receivables 398,277 402,969 702,679 649,435

Financial liabilities at amortised cost 314,657 401,843 297,026 311,575

109


32. relAteD pArtY trAnsActions

(a) immediate and ultimate holding company and other related parties

The Company’s immediate and ultimate holding company is Far East Organisation Pte Ltd, incorporated in Singapore. Other related parties comprise mainly companies which are controlled by the shareholders of the Company’s ultimate holding company.

(b) sales and purchases of goods and services

In addition to the information disclosed elsewhere in the financial statements, the following significant transactions took place between the Group and related parties at terms agreed between the parties:

group

2014 2013

$’000 $’000

Amounts billed to/(by) other related parties:

– Administrative income 261 342

– Sale of goods and services 878 621

– Purchase of goods and services (510) (716)

Payments made on behalf for other related parties 1,238 624

Outstanding balances at 31 December 2014, arising from deposits, sale and purchase of goods and services are set out in Notes 13 and 22 respectively.

(c) key management personnel compensation

Key management personnel compensation is as follows:

group

2014 2013

$’000 $’000

Wages and salaries, including directors’ fees 4,003 3,203

Employer’s contribution to defined contribution plans, including Central Provident Fund 35 55

4,038 3,258



33. segment inFormAtion

Management has determined the operating segments based on the reports reviewed by the Group’s chief operating decision maker (“CODM”) that are used to make strategic decisions, allocate resources and assess performance.

The Group operates its hospitality business across three segments: (1) management services, (2) operations and (3) property ownership. The property ownership segment includes all the hospitality properties that are owned directly by the Group or through the Group’s investment in joint ventures. As at 31 December 2014, the hospitality property ownership segment has 15 hospitality properties – ten in Australia, three in Germany, one in Denmark and one in Malaysia. The operations segment includes a total of 11 leased hospitality properties in Singapore, Australia and New Zealand. The management services segment includes all of the hospitality properties that the Group manages directly or through the Group’s investment in Toga JV.

The Group manages its property business across two segments: (1) development and (2) investments. The development segment included all property development projects at various stages of development that are held through either joint ventures or joint operations. The investment segment included medical suites and some offices held for rentals or/and long-term capital appreciation.

The Group’s investments segment relates to cash and cash equivalents and investments in equity shares in Singapore.

There are no revenues from transactions with a single external customer that accounts for 10 per cent or more of the Group’s revenue for the financial years ended 31 December 2014 and 2013.

The segment information provided to the CODM for the reportable segments are as follows:

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34. signiFicAnt trAnsActions During the preceDing FinAnciAl YeAr

(a) investment in joint venture

On 6 August 2013, the Group, through a subsidiary of Far East Hospitality Holdings Pte. Ltd. (“FEHH”), i.e., Far East Hospitality Investments (Australia) Pte Ltd (“FEHIA”), committed to subscribe to 50% of the total issued securities in Toga Hotel Holdings Unit Trust (“Toga JV”) for a consideration of approximately A$210,084,000. As at 31 December 2014, the Group had partially paid up its commitment as follows:

Date ConsiderationCumulative interest

of FEHIACumulative effective interest of the Group

% %

6 August 2013 $146,992,000 (or A$124,000,000) 37 26

31 July 2014 $35,909,000 (or A$31,731,000) 43 30

The balance of the consideration is payable, in full or in part, when the Toga JV requires the funds. The Group’s share of net profits and net assets in Toga Trust is proportionally adjusted to the extent that the securities are partially paid up.

(b) Acquisition of hospitality businesses

On 1 November 2013, the Group, through FEHH and its subsidiary, acquired the hospitality operations and property ownership businesses in Australia and New Zealand from The Straits Trading Company. A summary of the acquisition is as follows:

2013

$’000

Fair value of identifiable net assets acquired 159,159

Goodwill allocated mainly to hospitality property ownership CGU 18,241

Fair value of consideration 177,400

Consideration paid in:

− cash 76,180

− FEHH shares 101,220

Fair value of consideration 177,400

Consideration paid in cash (76,180)

Cash in businesses acquired 14,160

net cash outflow from acquisition of businesses (62,020)

(c) transfer of hospitality management business in singapore

On 1 November 2013, Jelco Properties Pte Ltd, a wholly owned subsidiary transferred its hospitality management service business to a subsidiary of FEHH, i.e. Far East Hospitality Management (S) Pte. Ltd. (“FEHMS”) for a consideration of $160,000,000 (“Business Transfer”). The Business Transfer is deemed to be a capital reorganisation with a dilution of interest in the hospitality management business. Accordingly, the assets and liabilities transferred were measured at their carrying amounts and a capital reserve of $10,557,000 was recognised as a result of this transaction with the non-controlling interest on 1 November 2013 (Note 27).


34. signiFicAnt trAnsActions During the preceDing FinAnciAl YeAr (continued)

(d) Acquisition-related costs The total costs of $16,915,000, including non-audit fees of $1,437,000 paid/payable to the auditors of the Company,

were included within “Other expenses” in the consolidated statement of comprehensive income and within “Cash flows from operating activities” in the consolidated statement of cash flows.

35. neW or reViseD Accounting stAnDArDs AnD interpretAtions

Certain new accounting standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after 1 January 2015. The Group and Company do not expect that adoption of these accounting standards or interpretations will have a material impact on the Company’s financial statements.

36. AuthorisAtion oF FinAnciAl stAtements

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of Far East Orchard Limited on 27 March 2015.

37. listing oF signiFicAnt compAnies oF the group

Name of company Principal activities

Country of business/

incorporation

Directownership

interest held

Groupeffective

ownershipinterest held

2014 2013 2014 2013

% % % %

significant subsidiaries held by the company

Far East Hospitality Holdings Pte. Ltd. Investment holding Singapore 70 70 70 70

Jelco Properties Pte Ltd Investment and sales of properties

Singapore 100 100 100 100

OPH Marymount Limited Property development Singapore 100 100 100 100

significant subsidiaries held by Far east hospitality holdings pte. ltd.

Far East Hospitality Properties (Australia) Pte. Ltd. Investment holding Singapore 100 100 70 70

Far East Hospitality Investments (Australia) Pte. Ltd. Investment holding Singapore 100 100 70 70

significant joint venture held by:

– Far east hospitality investments (Australia) pte. ltd.

Toga Hotel Holdings Unit Trust Ownership and management of

hospitality properties

Australia 43 37 30 26

– oph orion limited, a wholly-owned subsidiary

Orwin Development Limited Property development Singapore 60 60 60 60

significant associated company held by the company

FEO Hospitality Asset Management Pte. Ltd. REIT Manager of Far East Hospitality Trust

Singapore 33 33 33 33


115

STaTISTICS Of ShaREhOlDInGSAs at 9 March 2015

Issued and fully paid-up capital: S$439,616,660.57Number of shares issued: 400,587,031Class of shares : Ordinary shares fully paidVoting rights: One vote per share

Distribution oF shAreholDings

size of holdings no. of shareholders % no. of shares %

1 - 99 282 5.25 7,876 0.00

100 - 1,000 579 10.78 406,528 0.10

1,001 - 10,000 3,298 61.39 15,289,658 3.82

10,001 - 1,000,000 1,194 22.23 46,764,747 11.67

1,000,001 and above 19 0.35 338,118,222 84.41

total 5,372 100.00 400,587,031 100.00

tWentY lArgest shAreholDers

no. name no. of shares %

1. FAR EAST ORGANISATION PTE LTD 239,770,297 59.85

2. UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 20,553,641 5.13

3. ESTATE OF KHOO TECK PUAT, DECEASED 10,543,400 2.63

4. CITIBANK NOMINEES SINGAPORE PTE LTD 10,175,658 2.54

5. THE BANK OF EAST ASIA (NOMINEES) PRIVATE LIMITED 9,060,424 2.26

6. BNP PARIBAS NOMINEES SINGAPORE PTE LTD 8,916,800 2.23

7. DAIWA (MALAYA) PRIVATE LIMITED 6,731,200 1.68

8. PARAMOUNT ASSETS INVESTMENTS PTE LTD 5,136,293 1.28

9. DBS NOMINEES (PRIVATE) LIMITED 5,096,481 1.27

10. RAFFLES NOMINEES (PTE) LIMITED 4,987,215 1.24

11. DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 2,843,746 0.71

12. LEE PINEAPPLE COMPANY PTE LTD 2,842,696 0.71

13. MAYBANK KIM ENG SECURITIES PTE. LTD. 2,498,855 0.62

14. OCBC NOMINEES SINGAPORE PRIVATE LIMITED 2,330,154 0.58

15. HOTEL HOLDINGS (PRIVATE) LTD 1,699,600 0.42

16. UOB KAY HIAN PRIVATE LIMITED 1,491,200 0.37

17. HEXACON CONSTRUCTION PTE LTD 1,230,905 0.31

18. BANK OF SINGAPORE NOMINEES PTE. LTD. 1,106,457 0.28

19. GOODWOOD PARK HOTEL LTD 1,103,200 0.28

20. PHILLIP SECURITIES PTE LTD 975,227 0.24

Total 339,093,449 84.63


STaTISTICS Of ShaREhOlDInGSAs at 9 March 2015

substAntiAl shAreholDers

(as shown in the Register of Substantial Shareholders)

name Direct interest % Deemed interest %

Far East Organisation Pte Ltd 239,770,297 59.85 - -

The Estate of Khoo Teck Puat, deceased(1) 10,543,400 2.63 10,407,600 2.60

Tan Kim Choo(2) 224,659 0.06 239,770,297 59.85

The Estate of Ng Teng Fong, deceased(3) - - 239,770,297 59.85

Notes:(1) The Estate of Khoo Teck Puat, deceased, is deemed to be interested in the shares held by Daiwa (Malaya) Private Limited,

Goodwood Park Hotel Limited, Hotel Holdings (Private) Limited, Industrial Syndicate (Private) Ltd and Luxor Hotel Limited. (2) Mdm Tan Kim Choo is deemed to be interested in the shares of the Company held by Far East Organisation Pte Ltd (“FEO”)

through her 50% shareholding in the issued share capital of FEO.(3) The Estate of Ng Teng Fong, deceased, is deemed to be interested in the shares of the Company held by FEO through the Estate’s

50% shareholding in the issued share capital of FEO.

percentAge oF shAreholDings in public hAnDs

Based on the information provided to the Company as at 9 March 2015, approximately 34.84% of the issued share capital of the Company was held by the public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited.

117

nOTICE Of annual GEnERal mEETInGFAr eAst orchArD limiteD(Incorporated in the Republic of Singapore) (Registration No: 196700511H)

notice is herebY giVen that the Forty-seventh Annual General Meeting of Far East Orchard Limited (the “Company”) will be held at Antica Ballroom, Level 2, Orchard Parade Hotel, 1 Tanglin Road, Singapore 247905 on Wednesday, 22 April 2015 at 11:00 a.m. for the following purposes:

As orDinArY business

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and Independent Auditor thereon. (resolution 1)

2. To declare a first and final one-tier tax exempt dividend of S$0.06 per ordinary share for the financial year ended 31 December 2014. (resolution 2)

3. To approve the sum of up to S$540,000 as Directors’ fees for the financial year ending 31 December 2015, to be paid quarterly in arrears. (resolution 3)

4. To re-elect Mr Lui Chong Chee, a Director retiring pursuant to Article 101 of the Company’s Articles of Association.(See Note (1)) (resolution 4)

5. To note the retirement of Mr Kiong Kim Hock Arthur, a Director retiring by rotation pursuant to Article 96 of the Company’s Articles of Association, who has decided not to seek re-election. (See Note (2))

6. To note the retirement of Mdm Tan Siok Hwee, a Director retiring by rotation pursuant to Article 96 of the Company’s Articles of Association, who has decided not to seek re-election. (See Note (3))

7. To re-appoint Mr Cheng Hong Kok as a Director of the Company pursuant to Section 153(6) of the Companies Act (Chapter 50) of Singapore, to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company. (See Note (4)) (resolution 5)

8. To re-appoint Ms Chua Kheng Yeng, Jennie as a Director of the Company pursuant to Section 153(6) of the Companies Act (Chapter 50) of Singapore, to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company. (See Note (5)) (resolution 6)

9. To re-appoint PricewaterhouseCoopers LLP as Independent Auditor of the Company and to authorise the Directors to fix their remuneration. (resolution 7)

10. To transact any other ordinary business that may be properly transacted at an Annual General Meeting.

As speciAl business

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without modifications:

11. Authority to allot and issue shares

“That pursuant to Section 161 of the Companies Act (Chapter 50) of Singapore (Act) and the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST), authority be and is hereby given to the Directors of the Company to:

(a) (i) issue shares in the capital of the Company (Shares) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, Instruments) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible or exchangeable into Shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,



provided that:

(1) the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50% of the total number of issued Shares (excluding any treasury shares, if any) (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20% of the total number of issued Shares (excluding treasury shares, if any) (as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such manner of calculation as may be prescribed by SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (1) above, the total number of issued Shares (excluding treasury shares, if any) shall be based on the total number of issued Shares (excluding treasury shares, if any) in the capital of the Company at the time this Resolution is passed, after adjusting for:

(i) new Shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and

(ii) any subsequent bonus issue, consolidation or subdivision of Shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Act and the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.” (resolution 8)

12. Proposed Renewal Of The Shareholders’ Mandate For Interested Person Transactions

“That:

(a) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual of the SGX-ST, for the Company, its Subsidiaries and Associated Companies or any of them to enter into any of the transactions falling within the types of the Interested Person Transactions, particulars of which are set out in the Appendix to this Notice of Annual General Meeting, with any party who is of the class of Interested Persons described in the Appendix to this Notice of Annual General Meeting, provided that such transactions are in accordance with the review procedures for Interested Person Transactions as set out in the Appendix to this Notice of Annual General Meeting;

(b) the approval given in sub-paragraph (a) above (the “mandate”) shall, unless revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier; and

(c) the Directors of the Company be and is hereby authorised, jointly or severally, to take such steps and exercise such discretion as the Directors of the Company may in their absolute discretion deem fit, advisable or necessary or in the interest of the Company to give effect to the Mandate and/or this Resolution.” (resolution 9)

BY ORDER OF THE BOARD

CHWEE CHONG FOON MADELYN KWANG YEIT LAMCompany Secretaries

Singapore, 7 April 2015

119


notes:

(i) A member of the Company entitled to attend and vote at the above Meeting may appoint not more than two proxies to attend and vote in his/her stead.

(ii) Where a member appoints two proxies, he/she shall specify the proportion of his/her shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

(iii) If the member is a corporation, the instrument appointing the proxy must be under its common seal or under the hand of its attorney.

(iv) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 1 Tanglin Road #05-01, Orchard Parade Hotel, Singapore 247905 not less than 48 hours before the time appointed for holding the above Meeting.

explanatory notes:

(1) ordinary resolution 4 is to re-elect Mr Lui Chong Chee (who was appointed on 1 September 2014) pursuant to Article 101 of the Company’s Articles of Association and if he is re-elected, he is considered an Executive Director.

(2) Mr Kiong Kim Hock Arthur will retire as a Director of the Company at the conclusion of the 47th Annual General Meeting.

(3) Mdm Tan Siok Hwee will retire as a Director of the Company at the conclusion of the 47th Annual General Meeting.

(4) ordinary resolution 5 is to re-appoint Mr Cheng Hong Kok pursuant to Section 153(6) of the Companies Act (Chapter 50), to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company, and if he is re-appointed, he will remain as the Chairman of the Audit & Risk Committee and a member of the Remuneration Committee. Mr Cheng is considered an Independent Director for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

(5) ordinary resolution 6 is to re-appoint Ms Chua Kheng Yeng, Jennie pursuant to Section 153(6) of the Companies Act (Chapter 50), to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company, and if she is re-appointed, she will remain as a member of the Audit & Risk Committee and a member of the Nominating Committee. Ms Chua is considered an Independent Director for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

(6) ordinary resolution 8, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to allot and issue shares and to make or grant instruments convertible into shares in the capital of the Company for such purposes as they consider would be in the interest of the Company, provided that the aggregate number of shares which may be issued (including shares to be issued pursuant to convertibles) under this Resolution shall not exceed 50% of the issued shares (excluding treasury shares, if any) in the capital of the Company, of which not more than 20% may be issued other than on a pro-rata basis. The total number of shares which may be issued will be calculated based on the total number of issued shares (excluding treasury shares, if any) in the capital of the Company at the time this Resolution is passed after adjusting for (a) new shares arising from the conversion or exercise of convertible securities or employee share options on issue at the time this Resolution is passed, and (b) any subsequent bonus issue, consolidation or subdivision of shares. This authority will, unless previously revoked or varied at a general meeting, expire at the conclusion of the next Annual General Meeting of the Company.

(7) ordinary resolution 9, if passed, will renew the Mandate and empower the Company, its subsidiaries and associated companies, to enter into the Interested Persons Transactions as described in the Appendix to this Notice of Annual General Meeting. The authority under the renewed Mandate will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next annual general meeting of the Company, or the date by which the next annual general meeting is required by law to be held, whichever is the earlier.


personAl DAtA priVAcYBy submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents or service providers) for the purpose of the processing, administration and analysis by the Company (or its agents or service providers) of proxies and representatives appointed for the Annual General Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Annual General Meeting (including any adjournment thereof), and in order for the Company (or its agents or service providers) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents or service providers), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents or service providers) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

121

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FAR EAST ORCHARD LIMITED (Incorporated in the Republic of Singapore)(Registration No: 196700511H)

Proxy FormANNuAL GENERAL MEETING

IMPORTANTFor investors who have used their CPF monies to buy Far East Orchard Limited shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely For inFormAtion onlY. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF investors who wish to attend the Annual General Meeting (“Meeting”) as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

personAl DAtA priVAcYBy submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy terms set out in the Notice of Annual General Meeting dated 7 April 2015.

I/We __________________________________________________________________________________________________________

of ____________________________________________________________________________________________________________

being a member/members of Far East Orchard Limited (the “company”) hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

or failing whom, Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf at the Forty-seventh Annual General Meeting (“AGM”) of the Company to be held on Wednesday, 22 April 2015 at 11:00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specific directions as to voting is given, the proxy/proxies will vote or abstain from voting at his/her/their discretion, as he/she/they will on any other matter arising at the AGM and at any adjournment thereof.

No. Resolutions For* Against*Ordinary Business

1. Adoption of Audited Financial Statements together with the Reports of Directors and Independent Auditor for the financial year ended 31 December 2014

2. Payment of first and final tax-exempt dividend

3. Approval of Directors’ fees for the sum of up to S$540,000 for the financial year ending 31 December 2015

4. Re-election of Mr Lui Chong Chee as a Director

5. Re-appointment of Mr Cheng Hong Kok as a Director

6. Re-appointment of Ms Chua Kheng Yeng, Jennie as a Director

7. Re-appointment of PricewaterhouseCoopers LLP as Independent Auditor

Special Business

8. Authority to allot and issue shares

9. Proposed renewal of the shareholders’ mandate for Interested Person Transactions

* Please indicate your vote “For” or “Against” with a tick (√ ) within the box provided.

Dated this ___________ day of __________________ 2015.

________________________________________ Signature(s) of Member(s)/Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

Total number of shares in: No. of shares

(a) CDP Register

(b) Register of Members

notes:

1. A member of the Company entitled to attend and vote at the AGM is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

2. Where a member appoints two proxies, the proportion of the shareholding to be represented by each proxy shall be specified in this proxy form. If no proportion is specified, the Company shall be entitled to treat the first named proxy as representing the entire shareholding and any second named proxy as an alternate to the first named or at the Company’s option to treat this proxy form as invalid.

3. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this proxy form will be deemed to relate to all the shares held by the member.

4. This proxy form must be deposited at the Company’s registered office at 1 Tanglin Road #05-01, Orchard Parade Hotel, Singapore 247905 not less than 48 hours before the time set for the AGM.

5. This proxy form must be under the hand of the appointor or of his attorney duly authorised in writing. Where this proxy form is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney.

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy or proxies, failing which the instrument may be treated as invalid.

general

The Company shall be entitled to reject an instrument appointing a proxy which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the proxy form. In addition, in the case of shares entered in the Depository Register, the Company may reject a proxy form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the AGM, as certified by The Central Depository (Pte) Limited to the Company.

Fold along dotted line

Company SecretaryFar East Orchard Limited

1 Tanglin Road #05-01 Orchard Parade Hotel

Singapore 247905

Affix Postage Stamp

Fold along dotted line

Registration No. 196700511H1 Tanglin Road #05-01, Orchard Parade Hotel, Singapore 247905

T: (65) 6833 6688 F: (65) 6738 8085www.fareastorchard.com.sg

Documents

GROwTH in MOTiOn - Far East Orchard€¦ · in MOTiOn AnnuAl RePORT 2014. Contents 2 Corporate Profile • 4 Letter to Shareholders • 10 Corporate ... Company adopted its new name